The millennial generation lack basic knowledge of financial instruments, according to new research, which may be having a knock-on effect on their ability to save.
A YouGov study commissioned by online financial planning platform Finimize showed that 59 percent of millennials could not confidently explain what an ISA is, including 41 percent on those who work in the financial or legal sectors.
84 percent of the 1000 millenials surveyed couldn’t tell you what the term ‘equity’ means, with 90 percent unable to explain the concept of ‘asset management’. Half were not confident explaining any of the financial terms listed in the survey, which included ISA, bonds, equity, asset management, shorting, hedge funds, index tracker fund and derivatives.
According to the survey, Scotland and the West Midlands have the lowest levels of financial literacy among UK millennials. 60 percent of millennials in the West Midlands and 61 percent in Scotland couldn’t confidently explain any of the financial terms surveyed – significantly higher than the national average of 50 percent and even higher than the overall student average of 60 percent.
Max Rofagha, founder of Finimize, which is about to launch a new online financial guidance platform for millennials, said:
“It is unsurprising that financial literacy levels are so low amongst my generation. We were never taught these terms in school and it can be daunting to try and plan your financial life when you feel in the dark about how the industry works.
“The media assumes a basic level of understanding which just doesn’t exist and the financial advice industry simply does not cater for millennials. Our generation is looking for a new way to plan their financial future, free of jargon and complexity.”
Financial literacy has recently entered the National Curriculum for schools, brought in in 2014 to tackle the problem that many adults do not know how to budget. The fact that many millennials are blind to many key financial terms may come as no surprise in this day and age – with the gig economy growing, more and more millennials work freelance and freelance tax returns can be incredibly complex. Similarly, the range of ISAs and savings instruments has got increasingly larger – good for some, but ultimately confusing for others.