Half of people aged 18-34 are not confident in explaining some of the most common and basic financial terms from ISAs to bonds
The millennial generation struggles to understand basic financial language, according to a new YouGov survey commissioned by the online financial planning platform Finimize. 59% of millennials could not confidently explain what an ISA is, 84% couldn’t tell you what the term ‘equity’ means and 90% couldn’t confidently explain what ‘asset management’ is.
Of the 1000 people surveyed, 50% were not confident explaining ANY of the financial terms listed in the survey. These terms, spanning personal finance to banking, were: ISA, bonds, equity, asset management, shorting, hedge funds, index tracker fund and derivatives.
Those who work in the financial services or legal industries fared little better than those in other industries. According to the survey, 41% are not confident explaining what an ISA is, 65% couldn’t tell you what ‘equity’ means and 69% couldn’t explain what a bond is.
Scotland and the West Midlands emerged as having the lowest levels of financial literacy among UK millennials. 60% of millennials in the West Midlands and 61% in Scotland couldn’t confidently explain any of the financial terms surveyed – significantly higher than the national average of 50% and even higher than the overall student average of 60%.
Max Rofagha, founder of Finimize, which is about to launch a new online financial guidance platform for millennials, said: “It is unsurprising that financial literacy levels are so low amongst my generation. We were never taught these terms in school and it can be daunting to try and plan your financial life when you feel in the dark about how the industry works.
“The media assumes a basic level of understanding which just doesn’t exist and the financial advice industry simply does not cater for millennials. Our generation is looking for a new way to plan their financial future, free of jargon and complexity. That’s why we have created FinimizeMyLife – we’re on a mission to help millennials get their financial lives on track.”
Millennials were asked which, if any, of the following financial terms could they confidently explain to someone else? The overall results were as follows:
- ISA: 41%
- Bond: 17%
- Equity: 16%
- Asset management: 10%
- Shorting: 8%
- Hedge funds: 7%
- Index tracker fund: 5%
- Derivatives: 5%
- None of the above: 50%
Other key statistics from the survey included:
- 50% of all UK millennials could not confidently explain any of the financial terms surveyed
- 60% of all student millennials could not confidently explain any of the financial terms
- West Midlands and Scotland were found to be the least financially literate, with 64% and 61% of millennials (respectively) unable to confidently explain any of the financial terms surveyed
- South East and South West were found to be the most financially literate, with 40% and 42% of millennials (respectively) unable to confidently explain any of the financial terms surveyed
Of the millennials surveyed, 52% of those with between £10,000 and £24,999 of savings do not feel confident explaining what an ISA is. This suggests that even those with the ability and determination to budget every month lack the basic knowledge and guidance when it comes to managing their money.
Max Rofagha launched Finimize in 2015 to tackle the problem of financial literacy. After the success of its daily newsletter that demystifies financial news for millennials, the company is now set to launch an online platform that provides millennials with a simplified financial plan tailored to their needs.