A report published today by the Money Advice Service provides the strongest evidence to date on how good number skills help people manage their money and keep out of debt.
National Numeracy is now calling for action from government, financial services, employers and debt advice agencies to help people improve their numeracy and, with it, their financial capability.
The report, Numeracy and Financial Capability: Exploring the links, indicates that 18.5m adults, nearly half the UK working-age population, have ‘poor’ or ‘low’ numeracy. Even allowing for differences in income, housing tenure and other demographics these adults are less likely to save money and more likely to fall behind with bills than those with ‘moderate’ or ‘high’ numeracy. The report concludes: “improving one’s numeracy – as well as confidence - would result in improved financial capability, all else being equal.”
Examples of questions in the research that many people struggled to answer include:
Susie is paid £9.00 an hour. She gets a 5% pay increase. What is her new pay per hour?
If the inflation rate is 5% and the interest rate you get on your savings is 3%, will your savings have more, less or the same amount of buying power in a year's time?
Suppose you put £100 into a savings account with a guaranteed interest rate of 2% per year. You don't make any further payments into this account and you don't withdraw any money. How much would be in the account at the end of the first year, once the interest payment is made?
Mike Ellicock, CEO, National Numeracy, said: “It really is time that the whole financial sector woke up to the urgency of doing something about the link between number sense and money sense. It is shocking is that this is not routinely tackled in financial capability and debt advice interventions or within financial services firms’ support for vulnerable customers.”
At an event at the Bank of England earlier this year, National Numeracy put forward a new approach to making the UK numerate. The charity is now calling on government, regulators, financial services and employers to identify and then support adults who struggle with numbers to get the Essentials of Numeracy; thereby improving their everyday maths and helping them to make better financial decisions.