A new study suggests that a person's financial confidence is shaped more by background than by salary. Research from Octopus Money found that professionals from less privileged backgrounds are half as likely to believe they will have enough to retire comfortably, with just 35 per cent feeling confident compared with 67 per cent of better-off peers. The gap is also visible in everyday finances: only 35 per cent of working-class professionals say their salary covers their goals and expenses, versus 67 per cent of those from wealthier families. When it comes to investing, just 28 per cent have started investing for their future, compared with 63 per cent of those from more affluent upbringings.
Even on identical salaries, workers from lower socioeconomic backgrounds are up to three times more likely to say they could not cover an unexpected £500 expense. With almost four in ten UK workers coming from less privileged backgrounds, the confidence gap affects millions. The Financial Conduct Authority's Financial Lives 2024 survey also found a growing group of adults lacking financial confidence and skills, while the Money and Pensions Service reports that people in the most deprived areas score 7.7 out of 10 for money confidence, against 8.7 in the least deprived, and are more than three times as likely to say they could not cover an unexpected bill.
Experts argue the issue is not effort but know-how. Ruth Handcock OBE, chief executive of Octopus Money, said: "Two people can earn the same pay – but one builds savings and plans ahead, while the other constantly worries about making ends meet. That's not about effort, it's about know-how. Nobody teaches you how to manage money if you didn't grow up around it." Ed Fox, an inclusion and culture change expert, added: "Social mobility targets without effective financial planning are like asking people to climb without a harness. Some might make it, but more will fall than climb."
The study highlights how financial coaching can make a difference. Ella Rathiel, a 26-year-old admin worker from St Neots, grew up in a single-parent household where money was never discussed. "We never talked about saving. It was just about surviving," she said. After taking part in a financial coaching session at work, she built a rainy-day fund and reviewed her pension. "By the end of that first session, I felt emotional. I'd always been embarrassed about debt, but I realised I wasn't alone." Workers from less privileged backgrounds who received such support were 1.5 times more likely to feel confident about retirement and 22 per cent more likely to describe themselves as financially resilient.
Financial education is key to closing the gap, according to Jackie Spencer at the Money and Pensions Service: "Employers play an important role in this. Children and young people who receive financial education are also more confident and build good habits." Michelle Highman, chief executive of The Money Charity, added that those from less privileged backgrounds may have had limited exposure to conversations about saving, investing and pensions, which can lead to a lack of confidence. Experts argue that financial literacy is the missing link in Britain's social mobility efforts, without which many employees may never feel able to plan, save or invest.
