A new study has exposed the scale of financial ignorance in the UK, with just one in three people knowing the current rate of VAT, and even fewer knowing how much you can pay into an ISA – https://www.vanquis.co.uk/finance-quiz
The survey, conducted by Vanquis, asked 2,000 people 10 multiple-choice personal finance questions. Not one person got every question correct, with the average score being 2.6 out of 10.
Mortgages and National Insurance were the areas causing Brits the greatest confusion. 95% of the people surveyed by Vanquis had no idea how much money they could borrow on a mortgage, with just 5% correctly answering that it was 4.5 times your earnings. Meanwhile, nine out of ten people did not know the rate of national insurance contributions for an employed, basic-rate taxpayer.
According to the study, half of the UK population don’t know the difference between a Direct Debit and a Standing Order, and two thirds don’t know how much they can earn without paying income tax.
The results also highlighted how financial knowledge differs according to age, gender, location and income.
Men performed slightly better than women, with 13% answering at least 5 questions correct, compared to 11% of women. Splitting the results out by age, people aged 55 and over scored best, while those aged 16-24 performed the worst, with an average score of just 2.1 out of 10.
People who earn more than £100,000 a year answered 3.6 questions correctly on average compared with 2.3 by those earning less than £15,000. However, four in five of the highest earners did not know the minimum wage.
Bristol came out as the city with the best financial knowledge, with 20% being able to answer 5 or more questions correctly. Liverpool came in a close second, with 16% getting five or more correct.
At the other end of the table, Norwich was the worst-performing city, with just 7% of participants getting 5 or more questions correct and just 1.56% knowing how much they could borrow on a mortgage.