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Childhood Financial Capability And Young Adult Outcomes

Evidence type: Insight i


Previous research has shown that as young people approach adulthood, skills-based learning relevant to the independent financial lives they will soon be embarking on is essential. This is to enable them to enter adulthood with the skills and mindsets they need to make informed financial decisions and achieve their goals. Young people’s skills and behaviour at age 16 have been proven to be linked to their financial wellbeing in later life, and many of the indicators of vulnerability that can lead to poor financial capability as a young adult are stronger at the age of 16-17 than earlier ages.

Previous research has also shown that many young people approaching independence do not have the skills, attitudes, and behaviours to enable them to make the most of their money. For example, almost one-in-five young people have no bank account at all, and almost 6-in-10 14-17 year olds could not read a pay slip correctly. However, there remain significant gaps in our understanding regarding how financial education and building financial capability as a child or young person links to financial capability as an adult.

The study:

This 2019 report from the Money and Pensions Service (MaPS) outlines the key indicators found to have a link to the financial capability of young people who have recently transitioned into adulthood. It is based on statistical analysis of 397 people aged between 18 and 20 years old, along with their parents or carers. The young people also completed three annual surveys on their financial capability starting when they were aged between 15 and 17. This report looks at the relationship between the young person’s scores on several components of financial capability, and elements of their financial capability when they reached young adulthood..

Key findings:

Links between child financial capability and young adult outcomes

The report found that components of financial capability during childhood had an impact on financial capability when the young person reached adulthood.

  • When children had higher financial numeracy, as young adults they had higher savings, were more likely to take a long-term financial view, and were less likely to borrow money (for example, through an overdraft, credit card, or from family and friends).
  • When children actively saved or had a savings mindset, as young adults they were more likely to feel more confident when choosing financial products, were less likely to borrow, and were less likely to feel their bills were a burden.
  • When children were more likely to set goals, although as young adults they were less likely to feel financially satisfied, they were also less likely to feel pressure to spend when they couldn’t afford it.

Links between parental financial capability and young adult outcomes

The report found that the young person’s parent or carer’s behaviour and attitudes also had an impact on the young person’s financial capability when they reached adulthood.

  • When parents/carers saved regularly, the young person was less likely to borrow.
  • When parents/carers felt anxious about money, the young person was more likely to buy on impulse.
  • When parents/carers didn’t think anything they did would make a difference to their financial situation, the young person had a greater propensity to borrow.
  • When parents/carers considered themselves to be a good role model, the young person was more likely to hold long-term financial views.
  • When parents/carers felt they could impact their child’s behaviour, the young person was less likely to feel pressure to buy.
  • When parents/carers were over-indebted, the young person was more likely to borrow.

Implications and recommendations

  • The study has found, in common with other research, that greater numeracy skills have a positive influence on financial capability. This reinforces the importance of children and young people receiving financial education.
  • The findings from this report suggest that saving and setting goals are two components that it would be useful to focus on and track change within as a result of any financial education provided.
  • The findings also support previous research that has highlighted the importance of parents in educating their children on managing money.

Points to consider:

Methodological strengths and limitations:

  • This report is based on a relatively small number of young people. When broken down into sub-groups, caution must therefore be taken when inferring causality.
  • However, the methodology appears robust so the reader can have a fair degree of confidence in the main findings.


  • This report is relevant to all researchers, policymakers and other stakeholders with an interest in the links between financial capability in children and the related outcomes as they transition into adulthood.

Generalisability/ transferability:

  • This research can be treated as a good indicator of the links between the financial capability of children and young adults, though more evidence is needed on the precise drivers before scaling-up any related interventions.

Key info

Year of publication
Contact information

Money and Pensions Service