Vanessa Thompson, 33, from Birmingham, didn’t just brush up on the local lingo before her trip; she dedicated a whopping 10 hours a week to mastering money terms and making savvy investments in a fixed-rate savings account. This brainy move meant she could fund her entire holiday with the interest earned alone.
But Vanessa’s journey into the world of financial jargon began after a couple of hiccups in her younger years. At about 17, she got tangled up in contract phones for herself and a mate, but the baffling language in the paperwork left her clueless about what she was signing up for.
“I remember thinking, what am I looking at? What does this mean? Why can’t you put it on one piece of paper? ” Vanessa recalled, reflecting on the confusion that many Brits face when dealing with complex financial terms.
She’s not the only one scratching her head, as fresh research by AI-driven global payments network Klarna has uncovered that a staggering 40% of Britons reckon getting their heads around money-speak is tougher than picking up a new language and it’s the young adults who are feeling the squeeze the most.
Vanessa went on to share: “I didn’t understand how much money I owed and it messed up my credit score for years. I couldn’t open bank accounts or get new contracts. It took years to fix it.”
“Later in my twenties, I should’ve paid off something I bought for my house, but the language around the deadline was muddy and I got hit with this massive charge, over £100. I had to pick up overtime at work to pay for it.”
For those looking to improve their financial language literacy, she advised them to take it slow, and pick three things they want to learn first to avoid overwhelming themselves. As well as following people on social media who talk about finance but only after checking out their credentials.
It comes after Klarna launched its ‘Financial Takeaway’ series, with rapper-chef Big Zuu and finance expert Bola Sol, aiming to help improve the nation’s understanding of complex financial terms.
(Image: SWNS)
The study, part of Klarna’s commitment to improving greater transparency in the financial industry, found 64% of Gen Z think it’s easier to pick up basic foreign words than learn what the likes of APR, capital gains and compound interest mean.
Millennials face similar obstacles, with 57% considering financial terms to be more difficult to learn than a foreign tongue, according to the poll of 2000 adults. But this drops to just 33% of Gen X, with the older age group feeling more confident about their financial literacy.
It also emerged that while 16% of all adults are more interested in studying languages than money, the cost of not learning the latter can be significant. Roughly 6.3 million adults (12%) believe they have experienced financial losses to the tune of £1,009 per person, due to not understanding complex financial jargon in the past 12 months – equating to losses of £6,419,784,000-a-year across the UK.
As a result, 31% believe schools should prioritise teaching students financial literacy over foreign languages, according to the OnePoll figures. And with the general election looming closer, 17% would be more inclined to support a political party which prioritised schemes to improve financial literacy in schools.
Following the research, Sol, who has dedicated tens of thousands of hours over nearly two decades to making finances a second language, revealed tips for understanding complex money jargon, from using mnemonics to discussing finances with friends.
(Image: Getty Images)
She stated: “Money terminology can be tricky to get your head round – everything from APR to compound interest, but mastering it can give you confidence and control.”
“One quirky tip I love is using mnemonics and silly sentences to remember acronyms. Breaking learning down into manageable chunks is key. Start with just 15 minutes a day. Start with budgeting, saving, and understanding debt.”
“Out of all financial terms ‘Debt-to-income ratio’ is the most important concept to grasp. It’s fundamental to understanding your borrowing capacity and overall financial health.”
“Knowing this ratio helps you manage debt effectively and make informed decisions about taking on new debt. It’s vital we don’t operate out of desperation and make quick decisions when it comes to our money.”
Raji Behal, the head of Western and Southern Europe, UK and Ireland for the payment network, which recently launched Wikipink to promote transparency in the UK credit industry, stated: “We’re on a mission to help Brits better understand financial language so they can make smarter spending decisions.”
“For too long, financial institutions have been using complicated terms to keep their customers in the dark, resulting in billions of pounds lost. We want to uncomplicate the complicated, as ultimately, it’s better for everyone.”
The Big Zuu x Klarna Financial Takeaway Series will premiere on YouTube from Thursday 27 June at 10.00.