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New research reveals people aren’t as financial savvy as they like to think
New research by Ipsos MORI and King’s College London has revealed that the general public aren’t always bang on the money when it comes to estimating personal and public finances.
They quizzed 1100 people, asking questions regarding the cost of raising a family, the average deposit put down on a house and how much a University education costs. Read on to find out the results…
The cost of raising children - Underestimate
As a nation we massively underestimate the cost of raising a family. Those who took part were asked how much it costs to raise a child to the age of 21 and the average guess was less than a quarter of the true cost.
Average guess: £50,000
Actual figure: £229,000
The cost of childcare – Overestimate
When it came to guessing the average cost to send a child under two to nursery for 25 hours a week, people general overestimated how much it would cost – thinking it was double what it really is.
Average guess: £200 a week
Actual figure: £115.45 a week
The cost of a university education – Underestimate
We all know that going to university these days is more expensive than it used to be, thanks to eye watering tuition fees, however the general public still underestimated how much debt the average graduates leave with.
Average guess: £21,000 of debt
Actual figure: £44,000 of debt
The average cost of a house in the UK – Spot on
People generally did know how much the average house in the UK costs. The average guess was almost spot on, only £4,166 off. Those living in London did tend to overestimate, with almost 1 in 3 thinking that the average price in the UK was £300,000+.
Average guess: £190,000
Actual figure: £194,166
The average house deposit – Underestimate
We might know how much the average house costs but when it comes to the average house deposit then we’re way off. Only 1% of those questioned suggested a figure between £70,000 - £79,000.
Average guess: £20,000
Actual figure: £72,202
Current Bank of England base interest rate – Spot on
Average guess: 0.5%
Actual figure: 0.5%
49% of people knew that the current Bank of England base interest rate was 0.5%, but this could be due to the fact that it’s stayed the same for the last six years. When asked what the average Bank of England base interest rate has been over the past 40 years, many people found this trickier, guessing 4% on average which is almost half the actual figure of 7%.