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Literacy And Financial Capability: An Evidence Review

Evidence type: Review i


Recent evidence suggests that there are large gaps in both children’s and adults’ literacy skills and financial capability. Department for Education data shows that in 2018 a quarter of 11-year olds in England were unable to read well by the time they left school. Meanwhile, recent research from OECD shows that 25 per cent of 15 year olds across 15 countries were unable to make everyday spending decisions. Another recent study has shown that after leaving school, one-in-six adults in England have very low literacy, while a quarter of adults (25%) struggle with basic numeracy. While numerous studies exist on the links between financial capability and numeracy, there is a relative dearth of studies looking at the links between literacy and financial capability, particularly among children.

The study:

This 2019 review from the National Literacy Trust explores the link between literacy and financial capability for children in primary and secondary schools. The aim of the review is to establish what the links are between the two concepts, and to assess the theories behind these relationships with the view of testing them empirically in the future.

The final research questions used in this work were:

  1. What are the current conceptualisations of literacy and financial capability?
  2. What are the direct links between literacy and financial capability?
  3. What are the indirect links between literacy and financial capability?

Following the research questions being finalised, a search strategy was developed and key search terms were decided upon. As this was an exploratory review, the search terms and parameters evolved throughout the project, with new search terms being formulated based on initial findings. Google Scholar and ResearchGate were used to search online for relevant research, while evidence was also identified elsewhere through expert consultation and references from other pieces of work. Evidence was assessed for:

  • The relevance of the topic;
  • The type of document;
  • Whether it added new or valuable information;
  • The quality of the information.

Of the 130 pieces of evidence identified, 43 were included in the final review. The evidence was then synthesised before theoretical models were built that allowed conclusions to be drawn.

Key findings:

  • Overall, the review suggests that there is a need to establish exactly how literacy supports financial education, and practical ways of implementing this.
  • A number of studies were found highlighting the link between literacy and financial capability through skills. However no studies were found specifically exploring these factors among children in the UK.
  • The evidence suggests that socio-economic factors (such as parental employment status and income) are important in determining the levels of literacy and financial capability skills among children and into later life.
  • While this review states that literacy is connected to financial capability as a skill, it also presented evidence that the link between the two concepts may be formed through non-cognitive factors.
  • Both literacy and financial capability have been closely linked to non-cognitive factors in the literature, particularly to motivation. However, there was no evidence found that explicitly explored these relationships among children.
  • While schools have a role to play, they face barriers in teaching both literacy and financial capability. One of the barriers teachers face is a their lack of confidence in literacy pedagogy.
  • The researchers didn’t find any studies that explored the links between literacy and financial capability directly, having taken into account the comprehensive definitions of the concepts beyond skills. There was a particular lack of research about how these concepts interact in childhood and adolescence.
  • As a result, the National Literacy Trust has planned a survey of young children that will:
    • Explore the skills aspect of literacy and financial capability, testing how the skills aspect of reading and financial capability relate to each other.
    • Further explore the interrelationships between reading and financial skills, motivation and attitudes. This will have a particular emphasis on determining the importance of non-cognitive factors.

Points to consider:

Methodological strengths and limitations:

  • There is little information on the search terms used, as well as relatively little information on why some evidence was excluded.


  • This report is relevant to all stakeholders, academics and policymakers with an interest in the links between literacy and financial capability.

Generalisability/ transferability:

  • The research is mostly generalisable to the UK though readers should be aware of the fast-moving regulatory environment when drawing implications from the review’s findings, as well as some of the evidence being based on studies from other countries.

Key info

Year of publication
UK, United States
Contact information

Anne Teravainen-Goff, National Literacy Trust