Financial capability in Great Britain 2010-2012

1. Context
2. The study
3. Key findings
4. Points to consider

Context

The Wealth and Assets Survey (WAS) is a longitudinal survey conducted by the Office for National Statistics (ONS) that aims to address gaps identified in data about the economic well-being of households. It gathers information on level of assets, savings and debt, saving for retirement, how wealth is distributed among households or individuals and factors that affect financial planning. This article describes the results of analysis of the financial capability measures contained in the 2010 to 2012 WAS, many of which were asked for the first time in this wave.

The study

The article uses data from the third wave of the WAS (relating to 2010 to 2012) to define and measure financial capability among adults living in Great Britain. It is based on all adults who responded to the survey in person. A total of 27 measures were analysed to identify underlying dimensions of financial capability captured by the survey. Of these measures, 18 mapped onto six emerging financial capability dimensions: making ends meet; planning ahead; organised money management; controlled spending; staying informed and choosing products.

Key findings

An individual’s financial capability for the six dimensions is measured on a scale from 0 to 10.

• Individuals performed best at making ends meet (7.0) and least well at planning ahead (2.3). Staying informed also carried a relatively low average score of 3.2, while the remaining dimensions were in the middle of the range.
• It was unusual for individuals to score highly, relative to others, on all 6 financial capability dimensions (1%), and more than 1 in 5 (22%) did not score highly on any.
• Men score slightly better at making ends meet, planning ahead, and choosing products. They also score more highly than women on the staying informed dimension. Conversely, women score slightly higher than men at organised money management and controlled spending.
• Capability on the making ends meet and controlled spending dimensions increases steadily in the population of Great Britain with increasing age. For planning ahead, staying informed and choosing products, 16 to 24 year olds score particularly poorly.
• Those without qualifications scored least well on planning ahead, staying informed and choosing products, with financial capability increasing steadily for each group with higher qualifications.
• Levels of financial capability were generally higher among older individuals, those living in a couple without children, and those from higher socio-economic groups, although this differed by dimension.
• Overall, someone’s age and the financial wealth of their household appear to be the strongest determinants of capability across the dimensions. Independently of other factors, younger adults and people with access to the least financial wealth in their household are likely to be at greatest risk of detriment as a result of low financial capability across the six dimensions.

Points to consider

• Methodological considerations: The statistical methodology is fully described. Analysis on levels of financial capability is provided by socio demographic characteristics and by household wealth. Correlations between financial capability dimensions are also analysed.
• Applicability: The article provides a source of robust statistical analysis on financial capability in Great Britain relating to 2010-2012.

Full report

Financial capability in Great Britain 2010-2012 - full report