Almost a quarter of young people gain their understanding of finances from self-learned sources, such as social media and influencers, research from the London Foundation for Banking & Finance has revealed.
The report, Young Persons’ Money Index 2023/24, found the number of young people whose financial understanding was gained this way had increased over the last year, rising from 19 per cent in 2022 to 23 per cent in 2023.
The majority of these young people said this came in the form of social media or influencers, something which the report described as a “worrying trend”.
The first report in 2016 saw 6 per cent of young people cite self-learned sources.
LFBF chief executive, Shelley Doorey-Williams, said: “we could be at a tipping point for social media as a go to for financial information” which puts young people at risk of “real financial harm”.
She added: “We need to think differently, be more innovative and provide trusted information via the channels that young people rely on.
“While the government and schools have pivotal roles in improving financial capability among young people, we all need to play our part.
“Through this important research we hope to raise further awareness of the issues and encourage the finance sector, charities, educators and technology firms to join us in developing innovative approaches to supplement existing formal financial education.”
The report explained information on social channels and via influencers is largely unregulated unless posted by a regulated firm or accredited/approved organisation and, therefore, poses a “considerable” risk to young people’s finances.
It also found the number of young people relying on their parents for their financial understanding has fallen sharply in recent years, decreasing from 68 per cent in 2022 to 41 per cent in 2023. This is lowest this figure has been and a steep fall from the 80 per cent recorded in 2016.
Financial education
Despite this, the report also revealed financial understanding from school stood at its highest ever level, with 18 per cent of respondents identifying educational establishments as their source of information in 2023.
This is a rise on the 7 per cent who gave a similar answer in 2016 and the 8 per cent in 2022.
Contributing to this rise was the increased proliferation of financial education in school which has steadily risen since 2015.
The report said in 2023, 69 per cent of young people have studied personal finance at school.
This is a fall on the 73 per cent who studied finance in 2021 but an increase on the 29 per cent who did so in 2015.
Additionally, the report revealed 71 per cent of young people did not study personal finance at school in 2015 compared to just 31 per cent in 2023.
This increase in financial education has coincided with a decrease in curiosity, with the desire among young people to learn more about areas of finance falling across the last five years.
One such area was financial products as 87 per cent of young people said they would like to learn more about them in 2019 compared to 60 per cent in 2023.
