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Children and Young People Financial Capability

Evidence type: Insight i


The experiences of children and young people relating to money and finance have a deep and lasting effect on their financial behaviours and financial capability throughout the rest of their lives. All children require some form of financial education and support to manage their money effectively, but some children, because of where they live or their family circumstances, may face additional challenges pertaining to financial capability and benefit from more tailored and targeted support.

The study

This 2018 report uses the Money Advice Service’s Children and Young People Financial Capability Survey to explore the connections between children’s individual characteristics, skills, and contextual factors, and their financial capability. It attempts to pinpoint the key elements that are linked to lower overall financial capability, identifying the children who have lower levels than their peers, who may be considered financially ‘vulnerable’.

While there is no single definition of vulnerability, this report defines vulnerable children and young people as those who are at increased risk of poor financial capability, and/or at risk of disproportionately negative impacts of poor money decisions.

The survey data was collected in 2016 and contains responses from 4,958 children and young people aged 4-17, along with a parent or carer for each participant. The responses are weighted to be representative of the population of the United Kingdom. This report only focuses on those aged 7-17.

Statistical significance testing and correlation analysis was performed to determine whether observed differences in levels of financial capabilities between groups of participants are significant. The report also used logistic regression to determine whether significant differences remained between groups of children that are similar in other respects. Where a particular characteristic of vulnerability remained, it suggested that this vulnerability may be a key factor in explaining differing levels of financial capability.

Key findings

Individual characteristics

  • Having a long-term illness is negatively linked to financial capability, among children and young people aged 7-17.
  • Having a parent from an ethnic minority background is negatively linked with most indicators of financial capability, though there is a positive link with the child spending money less often and being more likely to accept they may not get things they want.

Individual skills and behaviours

  • Overall, behavioural and socio-emotional characteristics are negatively related to financial capability, with the link strengthening with age.
    • These characteristics are strongly related to financial mindset for children of all ages, and financial ability for younger children.
    • Poor behaviour is strongly and negatively associated with financial capability.
    • Poor self-efficacy and low self-esteem were associated with fewer financial capabilities, though the relationships were still mainly negative.
    • Cognitive vulnerabilities were also negatively related to low levels of financial cap, with performing below expectation in English or maths showing a particularly strong link.

Environmental factors

  • There were few instances of family structure relating to financial capability, though the strongest (negative) links were found between having a parent with sole-caring responsibilities and the elements of financial capability relating to financial ability and connection.
  • The strongest negative relationships existed between living in social housing or a deprived area and financial capability.
  • Growing up in ‘struggling’, ‘squeezed’ (MAS Segmentation) or overburdened homes is negatively linked to financial capability.

Financial education

  • Financial education in schools is positively related to financial capability.
  • For children with vulnerabilities, those who recall financial education in school display slightly better financial capability than those who do not. The size of this relationship is similar among all children, suggesting that receiving financial education at a young age is not enough to close the gap between vulnerable and less vulnerable children.

The findings from this research were used to inform the Money Advice Service’s Needs Analysis, which set out the extent of the Service’s knowledge relating to children and young people’s financial capability so far, and suggests which groups may benefit from extra support regarding their financial capability.

Points to consider

Methodological strengths and limitations:

  • Robust methodologies along with statistical significance testing are employed in this report.
  • The authors acknowledge that some of the family groupings may not have been representative (for example, children in multi-generational households), and that the survey may not be representative of children in residential care or those who lived independently.
  • While regression analysis highlights relationships between vulnerabilities and financial capability, it is possible there are further underlying factors that are not captured by the survey or are unobservable.


  • This report is relevant to all stakeholders, policymakers and educators with an interest in or who wish to commission financial capability and education interventions aimed at vulnerable groups of young people.


  • Due to a suitable sample and robust methodology, these findings can be generalised to the UK population, though further research is necessary to alleviate some of the authors’ concerns regarding representativeness.

Key info

Year of publication
United Kingdom
Contact information

Dr Gavan Conlon, Viktoriya Peycheva and Wouter Landzaat (London Economics) gconlon@londoneconomics.co.uk