Global Money Week: Two in five adults can’t calculate simple discounts when shopping

Published by Edmund Greaves on 16 March 2018.
Last updated on 16 March 2018

Global Money Week: Two in five adults can’t calculate simple discounts when shopping

Adults in England perform poorly compared to other countries when it comes to financial numeracy, according to a new study conducted by University City of London (UCL) and Cambridge University.

Two in five adults in England cannot apply simple discounts to everyday household products when shopping.

For example, one in three adults in England could not answer the following questions:

1. Suppose, upon your trip to the grocery store you purchase four types of tea packs: Chamomile Tea (£4.60), Green Tea (£4.15), Black Tea (£3.35) and Lemon Tea (£1.80). If you paid for all these items with a £20 note, how much change would you get?

2. Suppose, a litre of cola costs $3.15. If you buy one-third of a litre of cola, how much will you pay?

Meanwhile, when it came to looking at a graph with basic financial data, more than half of those surveyed in England and Northern Ireland failed to interpret the data.

The study was conducted across 30 countries and results analysed by Professor John Jerrim of the UCL Institute of Education and his co-authors Dr Aditi Bhutoria and Professor Anna Vignoles from the University of Cambridge. The study found that men on average perform better with financial skills, and the over 55s were the worst performing age group.

England is facing a ‘crisis’ thanks to woeful financial literacy

Professor Jerrim says: “This new research highlights how England is facing a crisis in terms of adults’ financial literacy skills. We all need to be able to conduct basic financial calculations in order to make rational well-informed decisions. This includes how much we should save into our pensions, understanding the financial implications of borrowing money from payday loan sites, through to whether we can really afford to buy a particular house.

“Our results bring into question how many adults in England really have the skills to make such complex financial decisions. The reality is that many adults struggle to complete even quite basic financial tasks.”

Jane Goodland, responsible business director at investment company Old Mutual Wealth adds: “When should you short a stock? What’s the implication of inflation on bond markets? When asked these questions large swathes of the population tune out as they find them irrelevant to their life. How about, questions like: Can I afford this house? How much do I need to save into my pension? And even, what’s the final price for this packet of potatoes if it’s got a 20% discount?

“Four-in-ten adults in England and Northern Ireland can’t correctly answer the last question and huge swathes of the population struggle to make informed financial decisions. This is leading to disturbing financial behaviour.

“Figures from the Office for Budget Responsibility this week painted a worrying picture for the state of the nation’s personal finances – revealing the savings ratio has been falling since 2010, with a pronounced decline over the past two years thanks to the combination of a decline in household income and an increase in spending.

“An understanding of budgeting, investing and making financial plans is hugely important to combat this behaviour and is lacking.”

Enter Moneywise’s 2018 Personal Finance Teacher of the Year Competition

At Moneywise, financial education is a subject close to our hearts. We believe that educating personal finance management from a young age is essential. That is why we have teamed up with Foreign & Colonial Investment Trust to offer schools with the best personal finance teachers a share of £12,500 to spend on equipment. Teachers at both primary and secondary level in UK schools are eligible for the competition.

This year, the prize money pot is much greater than it was for the same awards last year. So, we will be making separate awards to teachers at primary and secondary school level, splitting the £12,500 between the winners and runners-up in several categories.

To put forward your nominations, please email editor@moneywise.co.uk the name of the teacher(s) and the name and address of the school(s), plus your reasons for nominating them.

Personal finance teachers can also enter the awards directly. For an entry form, please click one of the following links:

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I have to disagree with the

I have to disagree with the final 2 paragraphs, what is the point of saving when financial repression means that you are continuously losing money. The cause lies with QE and artificially depressed interest rates. If the return on your savings is less than inflation you have an incentive to spend not save. But that after all was the purpose of QE, it has just gone on way longer than it should after the crisis it was purportedly introduced to remedy so that it has now become the problem not the solution.

It is not Financial Education

It is not Financial Education they need . What they do need is a secure grounding in fractions and percentages early on in their life. Before leaving primary school.

Being 70 I was taught most of

Being 70 I was taught most of this at a small rural school I went to, in those days we were taught common sense not all the rubbish they fill their heads with today. Things such as buying on credit, saving, paying bills and such was drummed into us by our parents. Today they try to make things easy for the thick depriving those with a bit of a brain from having the chance of good offers. Make people pass an exam before they are allowed a bank account, credit card, loan, mortgage or any credit purchase before being allowed it. Every day at school we had either 20 mental arithmatic questions or english/spelling questions, had to learn times tables, percentages, fractions, weights and measures in both metric and imperial. I passed my 11+ but family was too poor to allow me to go to grammer school, wanted me in work earning, no way do I regret this as I have done well with all the jobs I had done, engineering, IT teaching others also, accounts, payroll and buying for company, HGV driver, mechanic and plant fitter. Only poor health let me down late in life but I always enjoyed hard work and my brain can still operate well as old friends often ring me with IT problems and I can remember systems I built, installed and setup years ago, they can't understand how I rememer the things as I have out of it for 15 years.

Stop trying to bring anything

Stop trying to bring anything and everything under the "finance" umbrella. It's not a specifically financial problem here but a general one of poor numeracy skills.

It will NOT get any better

It will NOT get any better until someone takes us back to 1900, when children left school at 12 and started working. All this rubbish about unni is rubbish, start learning living.

I fink youve hit the nial on

I fink youve hit the nial on the hed, jackdusty. Wot's the point of unni anyway? Whoo needs to no the meening of werds like tautological, four exampul? Its obviusly dun you no harm.