People are not "wired" to handle money well and should be given more help to overcome natural behaviour patterns such as over-buying in the supermarket while hungry, a report argues.
Simply arming people with more knowledge about financial matters is not enough to meaningfully improve their ability to manage their money, according to the report from think-tank the RSA. It worked in partnership with researchers from the London School of Economics (LSE) and the Fairbanking Foundation.
The report highlighted "behavioural hurdles" that help to determine how well people might bounce back from a shock to their finances or how successful they are in planning for the long term.
It said that these are not character flaws but natural aspects of behaviour: "In other words, humans are not 'wired' to handle money well."
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One such hurdle was people buying items they do not need because they overlook how they might feel in a different situation. An example of this would be a supermarket shopper loading up more items into their trolley than they need because they feel hungry.
The buzz of excitement from impulse spending is another behavioural hurdle that can undermine long-term planning and savings, the report Wired For Imprudence, said.
Efforts have been made in recent years to increase people's understanding of money matters. Financial education was introduced onto England's national curriculum for the first time in 2014, bringing it into line with the rest of the UK.
The report suggested that there should be a shift in emphasis in financial education, from gaining knowledge towards people's behaviour. It said this could help people to use the money skills they have learned.
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Paul Dolan, professor of behavioural science at the LSE said: "Being good with money does not come naturally to some people and the options in an information and opportunity rich world can seem daunting to most of us."
RSA senior researcher Nathalie Spencer said: "Some of our natural dispositions can actually undermine our ability to manage money well, we call these the behavioural hurdles to financial capability.
"It is tempting to respond to these challenges with calls for more financial knowledge - the argument being that as long as people are better informed, they will be financially capable.
"Our research, however, has shown that this is not always the case. We suggest that supporting people in developing effective strategies to work with our behavioural hurdles, and providing the opportunity to practice those strategies and skills, may be more productive in the long-term."
Antony Elliott, chief executive of the Fairbanking Foundation, said: "Financial capability in the UK is too low and the effectiveness of financial education needs to be improved. I hope this report will stimulate all involved to rise to the challenge."
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