Financial knowledge and the links to financial wellbeing

MoneyView 2026 is our nationally representative survey of over 12,000 adults living in the UK, carried out during Summer 2025. It offers a unique insight into the population’s financial situation and their current feelings towards their finances.  

To help inform policy debate, we wanted to understand whether peoples’ knowledge of financial concepts contributes to beneficial financial wellbeing outcomes. This is to ascertain the role of financial education and upskilling to support better outcomes for individuals in society.

Research we undertook in 2017Opens in a new window demonstrated that there was a connection between Financial Numeracy and Financial Capability. It found that "improving one’s numeracy – as well as confidence - would result in improved financial capability, all else being equal. This means that if two people have the same demographic profile, but different levels of numeracy, the one with higher numeracy will tend to have better financial outcomes.”

Since that publication, we have developed a more comprehensive approach to measuring and defining financial capability and wellbeing with our nine-item measure that we refer to as the Financial Fitness Tool.

These nine questions encapsulate the key outcomes of financial wellbeing – feeling confident, resilient and empowered. They also cover the key enablers and behaviours that are shown to positively impact financial wellbeing - in particular regular savings, sensible credit use and engagement with retirement planning. These are demonstrable benefits and outcomes for individuals that form part of the UK Strategy for Financial Wellbeing.

In our MoneyView 2026 survey we were able to reinvestigate this topic using a shortened set of dedicated financial knowledge questions combining numeracy and related concepts. 

The key question was whether the link found in 2017 still held with these amended constructs, and to see if we could quantify the gain in Financial Wellbeing that increased financial knowledge could yield. 

We also wanted to understand which groups in society had low financial knowledge and how this compared with our other MoneyView findings.

MoneyView 2026 measured financial knowledge via five questions, tapping into themes such as interest, compound interest, inflation, investment risk and diversification. Most of the questions were drawn from established measures used by the OECD/INFE Financial Literacy Survey as well as from the Centre for Economics and Business ResearchOpens in a new window.

Each respondent receives a financial knowledge score ranging from 0 to 5, based on the number of questions answered correctly.

There is no universally agreed definition of 'low' financial knowledge. We developed a threshold using a largely data-driven approach, informed by the distribution of financial knowledge scores seen in our survey. 

Respondents who scored less than two out of five (that is, scores of 0 or 1) were classified as having low financial knowledge. Missing responses such as “don’t know” were treated as incorrect.  

We found that, based on this definition, 28% of the UK adult population are estimated to have low financial knowledge.

This threshold captures a meaningful minority of the population. If only respondents scoring zero were classified as having low financial knowledge, the proportion would fall to 11% of the population, however, we believe this would be too restrictive and would fail to identify many individuals who may still have limited financial knowledge. As such, we included the 17% of individuals who scored one out of five in the ‘low financial knowledge’ definition.

The resulting estimate of 28% is broadly comparable to the proportion of people reporting low financial wellbeing (24%), providing an additional sense-check that the threshold is identifying a significant and relevant group within the UK adult population.

The chart below shows the proportion of people with low financial knowledge across a range of demographic and socioeconomic groups. For example, 20% of men are classified as having low financial knowledge, compared with 34% of women.

The blue marker indicates the UK average of 28%. Groups positioned to the left of this marker have a lower incidence of low financial knowledge than the UK average, while groups positioned to the right have a higher incidence. Therefore, groups further to the right would be of most concern, as they are more likely to have low financial knowledge. These include:

• people with lower household incomes
• those living in more deprived areas
• people experiencing mental health problems
• people with disabilities, younger adults, and 
• those who may be in need of debt advice. 

In contrast, low levels of financial knowledge are less common among higher-income households, homeowners and older adults.

In summary, we can see that various groups perform better and others worse than average on financial knowledge:

This pattern is broadly consistent with what we see for financial wellbeing. Many of the groups with pronounced low financial knowledge also tend to exhibit low financial wellbeing.

Using Small Area estimation techniques that supplement the MoneyView data with relevant data sets from administrative data sources, we have been able to model out low financial knowledge to a lower geographic level.  

You can view the distribution of low financial knowledge at Local Authority level via our interactive map hereOpens in a new window. The darker the colour, the more prevalent low financial knowledge is and vice versa.

We can see that there is a positive association between financial knowledge and financial wellbeing. This means that an increase in knowledge is accompanied by an increase in wellbeing. The association is moderate in strength (correlation coefficient = 0.35). 

The chart below demonstrates that as scores on the financial knowledge measure increase, so does the average financial wellbeing score. 

For those scoring 0 at financial knowledge, the mean Financial Wellbeing score is 45 (just above the threshold for low financial wellbeing). Whereas, for those scoring 5 on financial knowledge, the mean is 69 (just above the threshold for high financial wellbeing).

As we have seen above, there is a moderate positive association between financial knowledge and financial wellbeing when looking at the two measures on their own. However, a range of other factors can influence both financial knowledge and financial wellbeing. For example, educational attainment, income and age may all be related to a person's level of financial knowledge as well as their financial wellbeing.

We wanted to understand whether financial knowledge is linked to financial wellbeing in its own right rather than simply reflecting other factors that might influence them both. To do this, we took account of characteristics such as age, income and education when analysing the data. This is similar to the approach we used in our 2017 research.

After accounting for these controls, the relationship between financial knowledge and financial wellbeing remained statistically significant. Specifically, a one-point increase in financial knowledge was associated with a 2.2-point increase in financial wellbeing, on average.

In practical terms, this means that if two individuals have similar demographic and socioeconomic characteristics but differ in their level of financial knowledge, the individual with higher financial knowledge would be expected to have higher Financial Wellbeing.

The analysis demonstrates a clear and statistically significant association between financial knowledge and financial wellbeing. The relationship established in 2017 still holds even when considering other factors that may affect financial wellbeing, and with updated variables of interest (our refreshed constructs). Individuals with higher levels of financial knowledge tend to report higher levels of financial wellbeing, even after accounting for a range of demographic and socioeconomic characteristics.

However, these findings should be interpreted with appropriate caution. While the results suggest that financial knowledge may play an important role in financial wellbeing, this analysis does not establish a causal relationship. The analysis is based on cross-sectional survey data, which has important limitations when assessing causality.

Future research could build on these findings by using longitudinal data or causal research methods to better understand whether improvements in financial knowledge lead to improvements in Financial Wellbeing over time.

Overall, the findings highlight the potential value of supporting people to improve their Financial Wellbeing through increasing their financial knowledge. This should be considered in the context of other financial capability factors also shown to help improve Financial Wellbeing, such as positive behaviours and confidence, as well ensuring access to appropriate financial products and services.

We welcome feedback, comments and opportunities for collaboration. If you would like to discuss the findings or learn more about the analysis, please contact us at contact@maps.org.uk.