As young people prepare for adulthood, understanding financial matters becomes increasingly important. However, a recent survey shows that 72% of secondary school children feel they don’t get enough support in school to learn about finances. This is concerning, especially since 82% of students want to become more knowledgeable about this topic.
To delve deeper into how much secondary school children really know about finances, the money team at Compare the Market surveyed over 2,000 secondary school students (aged 11-16), asking them questions on a range of topics from financial terminology to general money management knowledge.
Compare the Market also collaborated with MyBnk, a financial education charity, to address gaps in students’ financial knowledge and share tips to tackle these.
On average, students could correctly answer just 3 out of 17 questions on key financial topics
| The financial questions most secondary children answered correctly | |||
| Rank | Statement | Correct answer given | % of secondary school children who answered correctly |
| 1 | An overdraft allows you to spend more money than the amount you have in your bank account | True | 62% |
| 2 | Overdrafts are unlimited on all bank cards | False | 52% |
| 3 | Only people with credit cards have a credit score | False | 49% |
| 4 | You can earn up to £12,570 per year without paying tax | True | 48% |
| 5 | You only get a credit score when you reach 18 years old | True | 46% |
* Please note that this table only shows the top five results
Overall, secondary school students demonstrated a limited understanding of key financial concepts, being able to answer an average of just 3 out of 17 statements correctly.
The statement with the most correct answers was ‘An overdraft allows you to spend more money than the amount you have in your bank account,’ which 62% of students answered correctly. However, there is a misconception that overdrafts are unlimited on all bank cards, as only 52% answered that statement correctly. Gaining an understanding of this concept at a younger age can help encourage students to be more mindful of their spending and the potential consequences of using overdrafts.
Nearly half (49%) of students recognised that a credit score is not exclusive to credit card holders. This is a key insight, as credit scores are influenced by a variety of financial behaviours, including mobile phone payments – an important point for students as they begin to engage with financial services.
When asked about tax-free income, just 48% knew that one can earn up to £12,570 per year without paying tax. This aligns with the findings that nearly half (45%) of children this age are not confident in what taxes actually are and why they exist.
Nearly a third of students incorrectly believe student loans will affect your credit score
| The financial questions most secondary children answered incorrectly | |||
| Rank | Statement | Incorrect answer given | % of secondary school children who answered incorrectly |
| 1 | ISA stands for Independent Savings Account | True | 46% |
| 2 | The minimum deposit required to purchase a house is 10% | True | 35% |
| 3 | Student loans affect your credit score | True | 31% |
| 4 | The government pays a minimum of 5% into all pension schemes | True | 29% |
| =5 | To purchase a house, you must have life insurance | True | 28% |
| =5 | FSCS protection provides unlimited compensation in case a financial institution goes bust | True | 28% |
* Please note that this table only shows the top five results
The highest percentage of students, 46%, mistakenly believed that ISA stands for Independent Savings Account (when it actually means Individual Savings Account), while 35% thought that the minimum deposit required to purchase a house is 10% (when it is possible to have as little as 5%). While some of these topics, such as house deposits, may not be immediately relevant to students at their current life stage, it’s important for them to be aware so they can plan ahead as they move into adulthood.
Furthermore, 31% were not aware that student loans don’t actually affect your credit score (44% didn’t know the answer to this at all). This lack of understanding could potentially discourage students from considering university as a viable option, as they may wrongly believe that taking on a student loan will negatively impact their future creditworthiness. However, it’s important to note when applying for a mortgage, some lenders take student loans into consideration, to determine how much you can borrow.
Investments, ISAs, and credit scores among top areas students don’t feel confident in their knowledge
Although the survey clearly showcases a lack of understanding of various financial topics, when asked to consider their knowledge overall, 59% of secondary school children said they feel confident – highlighting a disconnect.
The survey results reveal that secondary school children feel most confident in understanding what debt means, with 70% confidence among respondents, which is crucial as it lays the foundation for responsible borrowing. Saving money (both how to do so effectively and the importance of doing so) is another area students feel confident in, taking second and third place. This suggests that many young people understand the importance of setting aside money for future needs.
Budgeting and managing expenses see a confidence level of 63% and following closely is knowledge of credit cards, with 62%.
The financial topics students feel the least confident in
The area where they feel the least confident is understanding compound interest, with 59% expressing uncertainty. Compound interest is where interest is accrued on interest already added to the account. Knowing about compound interest early can help students see how money can grow over time, but also helps them understand how it affects loans and credit. Visualising how costs can add up, can encourage responsible borrowing and saving habits to avoid debt.
Close behind is the topic of investing money, which includes understanding various types of investments and associated risks, where 56% lack confidence. Learning about investing at a younger age can help students understand how to grow their wealth over time through different investment options, such as stocks, bonds, and mutual funds.
Understanding ISAs is also a challenge for 55% of students. There are a variety of different ISAs available in the UK, which provide people with tax-efficient ways to save and invest money. Although 16 is the minimum age to manage a Junior ISA for yourself (and can’t withdraw until 18), having this knowledge early on could help encourage saving from a young age, and reach future goals. For example, a LISA (Lifetime ISA), available to those under the age of 40, could be an option for those saving for a house deposit or retirement. Not only are savings in a LISA tax-free, but the government also contributes up to £1,000 per year, making it a valuable tool for building long-term financial security.
The money team at Compare the Market and Leon Ward, CEO of MyBnk, share top tips on how to boost financial literacy in children:
Experts highlight the value of proactive education and engagement in boosting financial literacy among children. The money team at Compare the Market noted, “Adulthood is filled with financial decisions and by teaching key financial topics early, we can equip children with the tools to navigate their finances with confidence. It’s great to see that this appetite exists, with 82% of students wanting to become more knowledgeable about finances. Children can boost their financial knowledge by seeking out resources like online courses, workshops, or school programs focused on personal finance. Engaging with tools and materials that teach budgeting, saving, and investing can help them develop essential skills for managing money as they grow older
Similarly, Leon Ward, CEO of MyBnk stresses the role of practical experience, stating, “Our programmes show that hands-on, relatable learning about credit scores, pensions, and investments not only boosts children’s confidence but also encourages responsible financial behaviours. With 76% of children indicating they primarily learn about money from their parents, we encourage families to engage in open financial discussions and explore educational resources together. However, expert-led education is crucial – ensuring young people gain the right knowledge, skills, and mindset to navigate their financial futures with confidence. We believe that the language of money is a language for life, and every child deserves to be fluent.”
