UK households are being urged to act before £640 vanishes every year, but what no one admits is how embarrassment can trap you in the same mistake.
A couple managing finances at home reviewing bills and budget. (Image: Getty)
Do you know your gross domestic product from your exchanged traded funds? How about yields, annuities, correlation and arrears? If financial jargon leaves you flummoxed or with a headache you are certainly not alone. But financial illiteracy is possibly costing you and millions of other Brits hundreds of pounds in your pockets.
The average Brit is losing out on an average of £640 a year because of poor financial literacy, an alarming new study has found.
Around 40% of UK adults – roughly 20.3 million people say they don’t feel confident managing their finances and their financial literacy is found to be “embarrasssingly low.”
More alarmingly, this financial confusion has set Brits back an eye-watering £26 million collectively with nearly two-thirds (65%) struggling to grasp common financial terms and acronyms used in everyday financial documents.
This financial illiteracy is costing the average UK adult a whopping £640, recent research found from forex broker experts at BrokerChooser who analysed UK search data to uncover the financial terms that Brits find most confusing – and demystified what the most-searched jargon actually means.
Adam Nasli, Head Analyst from BrokerChooser, said: “Financial literacy is no longer just a nice-to-have skill – it’s essential. With AI now in the hands of fraudsters, financial scams are becoming more sophisticated and harder to detect. People need to be better equipped not only to manage their money wisely but also to protect themselves from misleading offers and deceptive financial products.
“Misunderstanding or overlooking commonly used terms like yield, ETF or equity can lead to costly mistakes – whether that’s misjudging the risk and return of an investment, or simply missing out on opportunities to build long-term wealth.
“Ultimately, understanding these fundamentals can be the difference between financial strain and sustainable wealth growth. It’s not about becoming an expert overnight, but rather building the foundation needed to make sound decisions, ask the right questions, and stay one step ahead.”
So in light of Financial Literacy Month this April forex broker experts at BrokerChooser have come up with the top ten most baffling money terms for Brits based on average monthly internet searches for definitions.
In first place is equity, followed by GDP (Gross Domestic Product), ETF (Exchange Traded Funds), APR (Annual Percentage Rate), Arrears, Correlation, Yield, Annuity, Principal and finally Capital.
Equity is the most misunderstood financial term worldwide and in the UK receiving a staggering 17,900 monthly searches in the UK and 247,100 searches globally.
Nasil explains:“While it’s a fundamental financial concept, equity is often misunderstood due to its broad usage across different contexts. Equity is the amount an owner would retain if they sold an asset or business, after settling any debts tied to it. In simple terms, it’s the value you truly own. For example, if you own a house worth £300,000 and you owe £200,000 on the mortgage, your equity in the home is £100,000.
In the stock market, equity usually refers to shares in a company – giving investors partial ownership, potential voting rights and a share in the profits. As with a home, a company’s equity represents the difference between its assets and liabilities – what the owners would effectively be left with after selling all assets and settling all obligations.”
GDP places second, with 10,400 monthly searches in the UK. Despite being frequently mentioned in the news, ‘GDP (Gross Domestic Product)’ ranks as the second most confusing financial term, drawing 10,400 average monthly searches in the UK, and 176,800 globally. GDP measures the total market value of all final goods and services produced in a territory – usually a country – within a given time frame such as a quarter or a year.
The total size of a country’s GDP, however, doesn’t tell us much on its own. But GDP per person often reflects how developed an economy is, and GDP growth – especially when looked at alongside other indicators – can be a useful sign of how healthy an economy is.
“Understanding this metric will help people make more informed choices about spending, saving, and investing. For example, strong GDP growth often signals a robust economy and healthy job market – boosting consumer confidence and encouraging big financial decisions like buying a home or investing in equities and other risk assets.
Conversely, a shrinking GDP may point to an economic slowdown, prompting more conservative financial behaviour. In such environments, investors typically rebalance portfolios toward defensive positions, shifting allocations to safer assets like bonds to mitigate risks,” says Adam Nasli, Head Analyst.
ETF (Exchange Traded Fund)’ places third on the list. An ETF is a fund traded on a stock exchange. A fund can include many asset types, including equities, bonds, commodities or even forex.
“Think of it as a ready-made investment portfolio that trades on the market. Many people are drawn to ETFs because of their low fees, tax efficiency, and flexibility. It also makes it easier for people to diversify their investments without needing to select individual securities. Whether you’re looking to invest in a specific sector, track a major index like the S&P 500, or gain exposure to gold or tech stocks, there’s likely an ETF for it,” Nasli continues.
Rounding out the top five financial terms that leave people scratching their heads are ‘APR (Annual Percentage Rate)’ and ‘Arrears’. Despite appearing on everything from credit card statements to mortgage agreements, APR continues to perplex many
It represents the total annual cost of borrowing, including not just the interest rate but also any additional fees or charges tied to the loan, providing a more accurate picture of what borrowers will actually pay.
“Consumers often mistakenly focus on the interest rate alone. But APR offers a more comprehensive comparison tool when shopping for loans, credit cards, or mortgages. A lower APR generally means a more cost-effective borrowing option in the long run,” says Nasli