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Financial Capability in the UK: results from the 2018 survey

Evidence type: Insight i


This report presents the findings of analysis of the 2018 Financial Capability Survey of UK Adults, commissioned by Money Advice Service. It explores the building blocks of financial capability, updating and extending similar analysis conducted in 2015..This was based on extensive desk research to define and measure a set of financial capability components, which were used to build a conceptual framework for financial capability and wellbeing. The purpose of the 2018 survey was to capture adults’ financial capability levels, replicating the 2015 components as far as possible. (A minority of components for the 2018 survey were refined, and a small number of additional components added, to ‘plug gaps’ in the 2015 survey).

The study

The study reviews the findings of the 2018 financial capability survey, focused on adults of working age and retirement age. The research scores 21 components of adult financial capability across the UK, on a scale from 0 to 10 (from ‘not at all capable’ to ‘highly capable’). The components are:

  • Financial wellbeing outcomes: current financial wellbeing, and longer-term financial security.
  • Financial capability behaviours; divided into two groups. The first group is associated with managing finances well day-to-day (credit, borrowing, saving, and budgeting). The second group focuses on planning ahead for life events (working towards goals, building resilience, planning for retirement and planning for later life).
  • Financial capability enablers (financial confidence, financial numeracy, engagement with money and engagement with the future) and financial capability inhibitors (savings, spending, digital engagement and engagement with advice/guidance). Confidence for retirement is identified as both an enabler and an inhibitor for working age adults.

The report analyses adults’ levels of financial capability and financial wellbeing for each of the components. The report considers differences in average scores by life-stage, income level and financial resilience. The analysis also explores the determinants of financial wellbeing outcomes and financially capable behaviours, including:

  • Whether financially capable behaviours are independently influenced by scores for the components associated with enablers and inhibitors;
  • Whether financial wellbeing outcomes are influenced by enablers, inhibitors and financial capability behaviours; and
  • The influence of personal and household characteristics on financial wellbeing and behaviour.

The report analyses survey data from working age adults and retired people. Principal components analysis was used to measure average capability scores, and multiple regression analysis was conducted to identify the financial capability drivers for each component. The data was weighted to be representative of all adults in the United Kingdom, by age, gender and geographical region. 5,974 adults (aged 18 and over), including 4,668 adults of working age (ages 18 to 64 inclusive) and 1,306 adults of retirement age (defined as aged 65 and over) participated in the survey.

Key findings

Levels of financial capability and wellbeing:

  • Current financial wellbeing scores were much higher than scores for long-term financial security. This is reflected by low scores on behaviours around planning ahead for life events.
  • Financial capability and wellbeing were significantly higher among people of retirement-age than working-age for many components, including current financial wellbeing, not borrowing for every day expenses and spending self-control.
  • Working-age adults scored better than older people on shopping around, working towards goals, digital engagement and engagement with advice.

Determinants of financial capability and wellbeing:

  • Behaviours and enablers/inhibitors played a significant role in predicting financial wellbeing outcomes. Enablers also help to predict financial capability behaviours, albeit more weakly.
    • Enablers and inhibitors explained 49% of the variation in not borrowing for every day expenses and 26% of the variation in managing credit.
    • Engagement with the future and engagement with money had strong positive relationships with active saving (enablers and inhibitors accounted for 27% of the variation in scores) and ‘keeping track’ behaviours (enablers and inhibitors explained 14% of the variation).
    • Engagement with the future strongly and positively predicted working towards goals (enablers and inhibitors explained 40% of the variation in scores).
    • Engagement with money and spending self-control influenced building resilience strongly and positively (enablers and inhibitors explained 25% of the variation in scores).
    • Current financial wellbeing was strongly predicted by the capability components, with all of the behavioural components contributing significantly to this score.
  • The study found that the components associated with financial capability behaviours and enablers/inhibitors was considerably greater than any single demographic or socio-economic characteristic in predicting financial wellbeing.

Points to consider

  • Methodological limitations: Although the 2015 and 2018 scores are not directly comparable, the 2015 survey components were reproduced in 2018 (using the same or very similar survey questions). This replication process increases the validity of the components used. This approach provides a good basis for measuring financial capability and financial wellbeing in the future.

  • Relevance: The findings provide useful insights that can inform the development of interventions and targeted support in improving financial capability among working-age and retired people.

Key info

Year of publication
United Kingdom
Contact information

Andrea Finney, Social Research and Statistics, University of Bristol - Money Advice Servicehttps://www.moneyadviceservice.org.uk/en