Young people are starting adult life with "dangerous gaps" in their money management skills, a study has found.

Two-fifths (42%) of 14 to 25-year-olds were unable to interpret the difference between being in credit and being overdrawn on a bank statement while about one in eight (13%) didn't know what an overdraft was, according to charity Pfeg (Personal Finance Education Group) and Barclays.

The survey of more than 1,800 young people found just 58% correctly identified the note "£200CR" on a bank statement as meaning an account was in credit.

Meanwhile, 8% of those surveyed wrongly thought an overdraft was a one-off loan from a bank with special low charges.

Over a quarter (28%) of young people did not know it would be better to opt for a low APR (annual percentage rate) than a higher one when taking out a credit card or a loan.

The findings mark the start of My Money Week – a series of activities involving the two organisations and thousands of schools across the UK (see our Financial Education section for resources, news and guides).

Compulsory financial education

Plans were announced in February for financial education to become compulsory in secondary schools across England (see the Financial education to be added to the national curriculum MSE News story). and its creator Martin Lewis have long campaigned for financial education to become part of the national curriculum. More than 118,000 people signed our petition on the issue in 2011.

Pfeg chief executive Tracey Bleakley says: "It is clear that many young people are entering adult life with dangerous gaps in their financial knowledge that could lead them into serious financial difficulty.

"These findings underline the need for all schools to teach their pupils about personal finance to equip them with the skills, knowledge and confidence they need to manage their money well."