How confident and capable are young people when it comes to financial concepts?

Our survey found that whilst most young people felt confident in managing their finances, many struggled to answer questions around inflation, interest rates and compound interest, all concepts which have a direct impact on personal finances. Only half understood the importance of paying off credit card debt each month. This has practical implications, with one quarter admitting they often ran out of money, and a similar number saying they had to borrow money from friends and family. They also face pressure from social media which glamorises spending on luxury items and pushes lifestyle and spending comparisons.

While some young people feel confident, others are struggling

Overall, three quarters (75%) of 16–25-year-olds felt somewhat (54%) or very confident (21%) about managing their finances. There were however one in five (20%) who said they were either not very confident (17%) or not at all confident (3%) about managing their personal finances.

Those between 21 and 25 report feeling a higher level of confidence

Respondents aged 21–25 were significantly more likely to say that they felt confident managing their personal finances (77%) compared to those aged 16–20 (70%).

How confident, if at all, do you feel about managing your personal finances?

Very confident

Somewhat confident

Don't know

Not very confident

Not at all confident

Limited understanding of simple financial concepts, leading to challenges

Although some young people express feeling confidence about managing their money, our research found that this confidence didn’t necessarily translate into competence and there are worrying gaps in knowledge when it comes to basic financial concepts.

Survey respondents were tested on their knowledge of four financial concepts including interest rates, inflation, the use of credit cards and compound interest and our research revealed: