Consumers negatively impacted by financial mistakes

More than 4 in 10 UK consumers say that they are still negatively impacted by financial mistakes they made in the past, according to research from Aviva. A greater number still say they wish they had managed their finances differently (64%) while 63% wish they had learnt more about financial matters when they were younger.

The survey looked at how UK consumers learn about financial issues, and whether they felt their financial education had started early enough. They were also asked whether their lack of knowledge and experience had impacted them negatively and whether it still continued to do so. The results show that most feel they would have benefited from more knowledge, from an earlier age.

On a more positive note, however, most consumers think that they manage their finances well now, with 78% saying they are ‘good’ or ‘very good’ at this. Not surprisingly, the over 65s are more confident about their financial management skills (87% agree) than the youngest in the survey (73% of 18 – 24 year olds).

Despite 43% of people saying they are still affected by past mistakes, 73% now feel that they are sufficiently knowledgeable about financial matters. However, confidence in explaining straightforward money matters is lower than this, with less than half the people in the survey feeling confident in explaining tax allowance on personal pensions (40% confident), how inflation impacts on savings (47%) and tax allowance on Cash ISAs (49%). Nearly a third couldn’t confidently explain interest payments on credit cards.

Unsurprisingly, people become more confident about financial matters as they get older, and rely on their own resources to keep themselves informed. 83% of over 65s think they are sufficiently knowledgeable now (compared to the average of 73%), and 87% say they are good or very good at managing their finances. However, even amongst this older group, half wish they had learned more about financial matters when they were young, 39% think their financial education started too late and 54% wish they had managed their finances differently in the past. More significantly, nearly a quarter of this age group say they are still being adversely affected by mistakes they made in the past which demonstrates that taking the wrong financial decision can have long lasting effects.

Parents are the most important source of information and education, with 44% of people saying they were one of their top 3 sources. Once people get to 55, more than half say they are self-taught, more than double the number of 18 – 34-year-olds. Schools are a top 3 source for 15% of people in the survey, and this is higher for the younger age groups; 19% of 18 – 24-year-olds say it was the main source, compared with 11% of over 65s.

Tim Orton, CEO Aviva Adviser Platform, says, “It’s striking that people across all ages say they wish their financial education had started earlier, despite the obviously positive news that most people think they are sufficiently knowledgeable now. There’s also clearly a continued need, throughout life, for people to refresh knowledge and for them to be able to access information through a variety of sources. The more informed people are, and from a younger age, the more they will be able to make the best decisions for their circumstances and avoid making mistakes that may impact on their financial well-being for years to come.”

“It’s sobering to realise that nearly a quarter of people aged over 65 are still counting the cost of mistakes they made in the past. Financial impacts of mistakes are felt even more amongst younger people, with over half of people under 45 saying they are still counting the cost. This shows that there is a lot more to be done to help people become better-equipped so that they can make the right decisions for their own circumstances.