A major 10-year strategy to help consumers prepare for and manage their money has been published today, after research reveals four in 10 adults are not in control of their finances.
The plan, which has been published by the Money Advice Service (MAS) in conjunction with the UK Financial Capability Board, has been devised with leading figures across the financial services industry, government and charities. MoneySavingExpert.com has also been involved.
It aims to address the "stubbornly low levels of financial capability in the UK" by helping people to develop the skills and knowledge they need in order to make informed choices at key life stages.
Examples of its initiatives include helping the education sector to deliver effective financial education for children, and working with the Government and employers to improve money management for those in the workplace.
While a number of steering groups will be established to bring about the change, the strategy's key message is that everyone needs to work together to achieve this; charities, the Government, regulators and employers.
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Why is this plan needed?
The Money Advice Service says the strategy is necessary to help the millions of people who aren't financially capable. The research found that:
- 22% of the UK population cannot read a bank statement.
- 36% can't calculate the impact of a 2% interest rate on £100 in savings.
- Only half of families have any life cover.
- 21 million don't have £500 in savings to cover unexpected bills like replacing the fridge or mending the car.
- 9 million don't have an approach to budgeting that they feel works.
- Around 8 million have problems with debt and of those, just one in six is seeking help.
'Money is a constant source of worry and stress'
Andy Briscoe, chairman of the Financial Capability Board says: "Four out of ten adults are not in control of their finances, so for a great many people money is a constant source of worry and stress.
"This is a problem first and foremost for the individuals concerned and for their families, but it also has wider implications for society and the economy.
"The stubbornly low levels of financial capability in the UK can no longer be tolerated. Today we are calling for a fully collaborative approach to ensure we achieve the goals set out in the Strategy over the next decade."