40% of adults are not in control of their personal finances, research by The Money Advice Service suggests.

20% are unable to read a bank statement while 40% have less than £500 in savings. 1 in 3 are unable to calculate the effect that a 2% annual interest rate will have on their savings.

In affiliation with the UK Financial Capability Board, a new 10 year financial capability strategy has been proposed to tackle the low levels of financial capability in the UK. The strategy will improve people’s ability to manage money on a day-to-day basis, focusing on developing their skills and knowledge to manage their personal finances.

Research among 5,000 adults and key organisations has identified problems in relation to managing their finances. Key findings include:

• 50% of families have life cover

• 21 million don’t have £500 in savings to cover regular bills

• 19 million lack an efficient budgeting approach to managing their finances

• 8 million have problems with debt.

The new strategy will help improve everyday management of finances among adults. The strategy will focus on two concepts:

• collective impact and cross-sector co-ordination

• delivering evidence-based interventions, with resources aimed towards activities to improve financial management.

Nigel Holland from Holland & Co Chartered Accountants said:

“ The report from the Money Advice Service is very concerning. If the figures are true, and I have no reason to think otherwise, it means that there are substantial numbers of people who have serious problems managing their finances. This suggests that not only will they suffer stress and worry but it also means that they have cash flow problems which could be overcome with some careful planning and improvement of their financial skills.

If we extrapolate this problem and extend it to the position of business owners and entrepreneurs it means that there is probably financial mismanagement on a sizeable scale in the business community.

The way to overcome this problem is for people and especially business owners to be trained in financial management. This is key to running a successful business and without it there is always the possibility that businesses will fail. At my firm we are very keen to offer advice to new start ups and existing businesses who need a little help in running their business.

It can work out a lot cheaper for a business owner to draw up budgets, cash flow forecasts and projected profit and loss accounts rather than run their business with little or no idea as to where or how their business will end up in 12 months time.”