Prioritising financial education will add £200bn to the UK economy by 2050
Prioritising financial education will inject an extra £6.98 billion into the UK economy each year
Brits who didn’t receive financial education as a child are more likely to be unemployed, or earning less today, than those who did
Kids who receive financial education will be £70,000 richer in retirement
LONDON (Thursday 25 November 2021): Prioritising financial education will add an extra £6.98 billion to the UK economy each year (£202 billion by 2050), according to new analysis commissioned by GoHenry, the prepaid Visa debit card and financial education app for kids aged 6-18.
To coincide with the launch of GoHenry's new in-app, gamified financial education lessons, ‘Money Missions’, the research, conducted in partnership with Censuswide and Development Economics, shows that if all adults had the opportunity to receive financial education when they were school age, the boost to annual business formation in the UK could amount to an additional 76,400 businesses each year. This would result in an annual increase of 123,000 direct jobs which could reduce unemployment in the UK by over 8%*.
Kids who were taught money lessons are earning more as adults
The research also demonstrates the impact financial education can have on an individual’s future career prospects. Brits who didn’t receive financial education as a child are now more likely to be unemployed, or earning less, than the national average*:
- Of those currently unemployed and actively seeking work, 41% didn’t receive any financial education vs 9% of those who did.
- Nearly half (46%) of those who didn't receive any financial education as a child are earning £15,000 or less annually, less than half of the national average income.
- Of those earning between £55,001-£65,000, more than three-quarters (77%) received some level of financial education, nearly twice the national average income.
A richer retirement
Those who received financial education as children are also likely to be far richer in retirement. Adults who learnt money lessons are saving on average 43% more into their pension plans per month compared to those who did not.
The table below sets out a calculation of what such a difference in savings effort could mean in a working lifetime. The increase in the average pension pot for someone saving £149 per month compared to someone saving £104 per month would amount to £71,250 over a 40-year working lifetime. Someone earning the national average would need to work more than two years extra to make up this shortfall.
Kids who don’t learn about money form negative saving habits in adulthood
Adults who don’t learn about money when they are young are less able to save and more likely to fall into debt.
Over half (51%) of those who received financial education as a child have up to £5,000 cash savings in an ISA or savings account compared to under a third (30%) of those who didn't. 40% of those who didn’t receive financial education said they have no savings at all and can’t afford to save. They could also be getting into debt via missed payments:
- 79% of adults who didn't receive financial education have fallen behind on utility bills or council tax payments over the last six months. 20% of those who received financial education said they would comfortably be able to pay for an increase of £100-£199 on monthly bills, but only 10% of those who didn't receive any financial lessons said the same.
- A fifth (20%) of those who received financial education said it would take them a short amount of time, from 7 months to one year, to save up to £20,000 for a big expenditure such as a wedding, car or a trip abroad. Almost a third (31%) who didn’t receive financial education when they were younger said that saving up for a big sum like £20,000 is unachievable for them.
Louise Hill, Co-founder and COO of GoHenry said: “These findings clearly demonstrate the positive impact that financial education has on individuals, businesses and the wider UK economy. The Autumn Budget neglected to recognise the importance of financial education for young people, despite the fact that poor numeracy can cost individuals up to £1,600 a year in lost earnings as an adult**. It is vital that we teach these essential life skills much earlier to bridge the financial capability gap that is costing the UK billions every year.”
Commenting on the findings, Stephen Lucas, Economist at Development Economics said: “The opportunity to receive financial education clearly has powerful benefits for children later on in life. To me, the most important impact on the economy is the link between financial education and future attitudes towards starting a business. Around half of all job creation in the UK is driven by start-up and early growth stage businesses, so anything that has the potential to boost start-up rates has the potential to generate powerful effects on future levels of employment and wealth creation.”
To help address the financial literacy gap, GoHenry has launched “Money Missions’, an in-app experience providing gamified financial education lessons, designed to make learning about money a fun and interactive experience for kids and teens. Developed with teachers and financial education experts, including UK charity MyBnk, each lesson is linked to national financial education guidelines.
To learn more about Money Missions, visit GoHenry.com.