FINANCE
Live and Learn
Ignorance is certainly not bliss when it comes to your finances – in fact, Kay Hill discovers, a new report suggests that a lack of financial savvy could cost you hundreds of pounds a year
added to the mortgage or paid up front, enabling you to directly compare different options.
If you’re a househunter over the age of 28, you probably had absolutely no financial education at school – it only made an appearance on the National Curriculum in 2014, as a small part of “citizenship” classes at secondary school. As a result, while you probably learnt all kinds of things in maths lessons that you will never use again, basics like budgeting, working out interest rates or understanding investments may have totally passed you by. Financial Education charity Money Ready recently published a report called The Cost of Not Knowing , which estimates that a lack of financial literacy could cost you over £640 a year, just for a single delayed or mismanaged financial decision. Urging the Government to extend and improve financial education in schools, the charity’s CEO, Leon Ward, says, “Financial literacy is a skill we rely on every day, often without realising it. Yet too many people aren’t taught how the system works, leaving them vulnerable to costly mistakes and unnecessary stress.” The report discovered that 39% of adults feel anxious about money, 27% feel ashamed of their lack of knowledge and 21% are losing sleep over their finances. So what kind of mistakes does the report say are costing people the most money – and how can people avoid falling into the “not knowing” trap? MORTGAGE MISERY The most expensive mistake that the report uncovered was “putting off a big financial decision such as a mortgage or loan because it felt confusing or overwhelming” – a problem that it estimates costs £641 a year. Mortgages can certainly seem confusing, especially as many of the lenders who appear at the top of the tables for having low interest rates also charge the highest arrangement fees, which can make it difficult to compare like with like. With any life skill in which we find ourselves lacking – car repairs, DIY, frozen computers – there is always one foolproof answer, and that’s to find an expert to do it for us. Luckily, there are many mortgage brokers who will work out the best deal for you, for little or sometimes no cost. If you want to work it out for yourself, there are online tools that make comparisons much easier. MoneysavingExpert’s basic mortgage calculator, for example, allows you to work out your monthly payments for different interest rates, arrangement fees, and whether those fees are
PENSION PERILS When you’re saving hard to buy a house, it’s easy to think that your pension is a worry for another day – but the report estimates that “Not taking advantage of employer pension contributions” costs people £566 a year. Almost everyone who is employed will be auto-enrolled in a company pension scheme, unless they actively decide to opt out, and while opting out is tempting when you are counting every penny, if you do so, what you are really doing is turning down free money! The minimum amount that your employer can put into a workplace pension is 3% where you put in 5%, so for every £100 you pay, your boss has to give you £60 on top. Add in the tax relief that you also get on pension contributions and it really would be a shame to miss out.
EXPERT COMMENT
Over the past decade, I’ve spent much of my career delivering nancial education to adults across the UK on all things personal nance. I’ve seen rst-hand the impact of low nancial literacy – from elderly clients confused by their late spouses’ investments, to employees unaware of how pensions help them keep more of what they earn. I’ve lost count of how many times I’ve heard adults say, ‘why weren’t we taught this in school?’ Financial education from an early age isn’t just helpful – it’s life changing. Financial worries are one of the biggest causes of stress today. The key to reducing that anxiety? Knowledge. Financial education isn’t about growing wealth for luxuries, it’s about understanding how to make smart choices to build nancial independence and create a future of stability. Life is littered with money decisions, one or two poor choices can have a lasting impact, which is why early education can be a game changer. Financial literacy should be a life skill, just like reading or writing. Educating children equips the next generation with the skills to navigate money con dently, and over time this should help close the investing and wealth gaps. The work JFF does in schools gives young people the tools to take control of their nancial futures.
RENEWAL RAGE The next most expensive mistake, that costs around £427 a year, is a really
obvious one – paying more than you need to for a service – plus a potential £213 a year if you are paying for a service you
don’t use and £331 a year if you stay with the same
provider out of habit instead of switching. Companies love you to sign up for auto-renew, which can be handy with things like car insurance so you don’t forget and end up driving illegally, but they don’t do it out of the kindness of their hearts! It’s very common for regular payments
Clare Stinton, Head of Workplace Saving Analysis,
like insurance, car breakdown memberships,
Hargreaves Lansdown –
internet contracts etc to suddenly jump in price on renewal, and if you’ve missed that one little
Corporate Partner at JFF, Just Finance Foundation
86 First Time Buyer April/May 2026
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