Drawing on their unique experience, this report begins to close the evidence gap by examining the financial skills needs of Citizens Advice clients. In particular, we focused on the money skills of our local customer base, which includes some of the most underserved and. Core money skills are what clients are good at, how often they track money (58%) and their knowledge of how to manage expenses (58%).
Many clients have strengths in a few key money skill areas, but the picture is complex and nuanced.
Low self-esteem is a factor for many clients, regardless of their reporting of high and low scores in other areas. What this indicates is that establishing a sense of self-efficacy when it comes to money is a critical area of need. Almost half (49%) say they have low confidence when it comes to dealing with their money matters.
Of this group, almost half again report low scores in many other areas of money skills. One of the key findings from this analysis is the importance of trust in general, and this is an area we hope to explore further in future research.” Three specific areas stood out in terms of where customers report the lowest scores: confidence in taking action on their money matters, how often they are informed about their money services, and how much knowledge they have about their money services.
The Stay informed knowledge question specifically asked customers how much they knew about the main information about their money services such as banking, benefits and loans. Of those who score low in other areas, at least 70% score low in one of these three. I understand some things about these things, but not enough.” Citizens Advice customer to stay informed.
Core money skills are where some clients are doing well
Within this group of consistently high scorers, their knowledge of having enough money to live on is where most scored themselves high (92%). This may suggest that knowing how to maximize one's income to cover the essentials is a key factor in high financial capacity, while self-confidence potentially is not. Therefore, assumptions about self-reporting of high scores as a marker of high or even over-confidence may be somewhat counteracted by this finding.
High Scores with Room for Improvement and Low Scores to Start While we often talk about high, low, and average scores here, it's important to consider the overall distribution of customers by score across all areas and the differences within that. Many customers with low scores (1 to 3) cluster at the upper end of this range, indicating that most of this group has some knowledge and confidence and occasionally takes action, which provides a basis for work. Again, trust still appears as an area where most rate low and least high.
Conversely, customers with high scores (5 to 7) cluster at the lower end of their range, showing that many in this group still believe they could improve. The higher proportions giving themselves top scores for action compared to knowledge may indicate that people are trying hard to move forward but recognize the need for better tools and approaches. For example, some clients gave themselves a high score in one area while reporting low or average scores in others.
A large proportion of customers report high awareness of controlled spending, but almost 1 in 5 of them rate themselves as low or average on how often they do it. This may be because customers may have the knowledge but need more incentive to do it more often. Some of the barriers to taking action here may be a lack of control over certain items or spending habits.
The pressure of constantly counting pennies can also mean you feel the need to take a break and splurge on yourself every now and then, even if it means giving up some necessities. Most importantly, of those with high scores in these three areas, at least 1 in 3 still report low or average scores on their staying informed, attitude of informed knowledge, and determination to take action on money matters.
What other factors matter?
Knowing this allows us to provide holistic, appropriate and targeted support. Understanding the different mechanisms that play a role in people's money skills can help us understand who needs help most and when. Knowing this allows us to take a holistic view of each customer's situation, understand the range of barriers and. Here we take a closer look at these factors, while comparing our findings with existing research to examine important similarities and differences with the general population.
Where we refer to a significant difference being present, this statistical significance is based on a 95% confidence interval and where.
Demographics
Strong connections
In home ownership, home owners report significantly higher scores than social housing and private renters in half of the money skills domains.
Moderate connections
When it comes to household type, clients with adult dependents have significantly lower scores than those without adult dependents in. This goes back as far as the FSA's 2006 baseline survey, which found that household type alone 26 is not a determinant of financial literacy unless seen in combination with other factors such as household income and age. Looking at household income, registered clients earning a low income scored 27 significantly higher than those with an above-average income for.
More extensive research shows that there is a strong relationship between household income and money skills, for example ISER found that a decrease in household income results in a statistically significant 28 decrease in money skills, while an increase in household income results in a significant increase in money skills. Research from Lloyds has also shown that the relationship between digital skills and money is 29 strong, showing that online consumers save an average of £744 a year compared to those who are not online and 86% of people who manage their money online report that they "worry less because they can track their balance" suggesting there may be some mental health implications here. Clients with literacy needs reported significantly lower scores and fewer high scores in all domains of money skills, indicating significantly lower confidence scores.
The differences between those with English as a first or second language were inconsistent and small in the money literacy areas, except in. Clients who achieved the lowest math skills score had significantly lower money skills scores than those with higher math skills scores in all but one area of knowledge, action, and confidence. Little other research has found a strong link between math skills and money skills, but it's clearly important.
Situational factors
In other research, the PFRC found a strong statistical relationship 31 between educational qualifications and most financial capacities. Recent findings from a general population survey show that an individual's confidence in applying their 32 basic math skills is important to financial well-being. Indebted clients scored significantly lower on knowledge, action and trust than indebted clients in all areas; this was significant at both the 95% and 99% confidence levels.
So far, little other research has been done to look at the specific relationship between debt and money skills other than a 2015 national survey that shows how servicing historical debt can significantly impair people's ability to save and their future financial resilience. Research by ISER found that decreases in household income are associated with 37 reductions in money skills while an increase in household income is associated with an increase in money skills. Clients who reported being affected by a physical illness scored significantly lower than those who did not for 'management of money knowledge', 'management of money action' 'controlled spending knowledge'.
Few studies examine the relationship between physical health and its relationship to the level of money skills, with the exception of ISER 38, which found that improving money skills can be beneficial.
Weak connections
Conclusion
Appendix
Results tables
Using the Spearman test (R >0.5), it was found that all areas of money skills have statistically significant positive correlations with each other.
Qualitative feedback
Survey design
As shown in the diagram below, within each money literacy area there are one or two sub-areas. The first subareas support primary questions that assess the main aspect of each money literacy area. In the survey, we focused on asking about the 'primary' aspects of each money literacy area in order to keep the survey to a reasonable length and maintain question granularity.
These questions and scales are owned by Citizens Advice and are subject to copyright restrictions, so reproduction must include the relevant copyright notice set out at the end of this document and no changes must be made to their wording, response categories or layout. For further information please contact the Citizens Advice impact and evaluation team: [email protected]. The Challenge can provide useful support to candidates who wish to further develop their mathematics.
2 – 4 points / Amber – Subjects in this range have demonstrated some skill in everyday mathematics which will enable them to successfully carry out many numeracy-related activities in the world of work and in everyday life. The challenge is an ideal self-help tool for candidates in this category who want to improve their mathematics. Subjects in this category are likely to have serious difficulties in dealing with even the most basic mathematical demands in the world of work and in everyday life.
Free, con dential advice
Whoever you are
