A growing disconnect between perceived financial confidence and actual understanding is leaving many UK adults exposed to poor long-term financial decisions, according to new research from financial education charity Money Ready.
The study finds that 83% of adults in Britain say they feel confident managing their money. However, when tested on basic financial concepts, significant gaps in knowledge quickly emerge.
Nearly half of respondents, 46%, believe all forms of debt have a negative impact on a credit score, while 37% wrongly assume that all debt is inherently bad.
The findings form part of Money Ready’s Cost of Not Knowing campaign, which highlights the financial and emotional consequences of limited financial literacy. Previous research by the charity suggests that financial confusion costs the average Brit £641 a year.
The latest data indicates that overconfidence may be preventing individuals from seeking guidance or education that could help avoid these losses.
While respondents appeared comfortable with everyday money management, the research shows confidence falls sharply when longer-term financial planning is considered.
Almost half of those surveyed admitted to having only some or very little understanding of investments, at 48%, and pensions, at 47%. Similar gaps were identified around taxes, at 43%, and ISAs, at 41%.
Misunderstandings around credit and banking were also widespread. Almost a quarter of adults, 23%, believe it is impossible to go into debt when using a debit card. A further 23% believe it is never a good idea to use a credit card, a view that could limit opportunities to build a credit profile needed for major financial commitments such as buying a home.
Leon Ward, CEO of Money Ready, said: “Confidence is usually a good thing, but in personal finance, it can be a double-edged sword. If you believe you’re an expert, you might be less likely to double-check the fine print or seek additional guidance.
“Misconceptions like believing all debt is bad or thinking you can’t go into debt with a debit card can have real-world consequences. But this isn’t a personal failing. Most of our financial habits are shaped by circumstance and trial and error, not education.
“To build a financially savvy population, we need to move past ‘surface-level’ confidence and equip people with genuine, deep-rooted knowledge. That’s how confidence becomes capability.”
As it marks its 20th anniversary, Money Ready is calling for a more systemic approach to financial education, focused on deeper, life-stage-specific learning rather than generalised advice. The charity says improving financial understanding is essential not only for individual households, but also for wider economic stability.
