One of the Financial Services Authority’s (FSA’s) four statutory objectives, set by the Financial Services and Markets Act (FSMA) 2000, is to promote public understanding of the financial system. Under this remit, the FSA leads the UK’s National Strategy for Financial Capability, which brings together industry, government and the third sector to deliver financial capability programmes which create confident, capable consumers, doing so in ways that people will most understand and in places most useful to them. These programmes target different groups, such as expectant parents, employees, young people and hard-to-reach groups, with tailored initiatives designed to improve financial skills. This research explores how levels of financial capability might relate to and affect psychological wellbeing.
This research makes a valuable contribution towards the development of effective policy and practice aimed at improving the UK’s financial management in this difficult time and beyond.
Key findings include:
- Moving from low to average levels of financial capability improves psychological well-being by 5.6% and life satisfaction by 2.4%. It also decreases the likelihood of suffering from anxiety or depression by 15%.
- For the divorced and the unemployed the relationship is even stronger- the same change in financial capability leads to an 8.8% improvement in well-being.
- Earning £1000 more a year improves life satisfaction by only 0.2%- 12 times smaller than the impact of improved financial capability- and the effect of a decrease in financial capability is almost comparable to the effect of being divorced (which leads to a 3% reduction in life satisfaction and 8.3% reduction in well-being
To download the report visit the FSA website