Now we have an excuse for being broke. Just 55 per cent of Irish adults are deemed to be financially literate and can demonstrate a clear understanding of how money works, a new global survey has shown.
According to the S&P Global FinLit Survey for 2015, just 55 per cent of Irish adults are deemed to be “financially literate”, compared with 67 per cent of UK adults and 57 per cent in the US. The Nordic countries are streets ahead, with nearly three out of every four adults (71%) deemed to be financially literate in Norway, Denmark and Sweden, ahead of next best Canada (68%).
However Ireland did outperform some of its close European neighbours, including Luxembourg (53%); France (52%) and Spain (49%). Worst of all in the global survey was the Yemen (13%), ahead of Albania and Afghanistan, both at 14 per cent.
The survey also exposes a gender gap; in the EU as a whole, 56 per cent of men are financially literate, compared to 48 per cent of women - a gender gap of 8 percentage points. Worldwide, the average gender gap is 5 percentage points - 35 per cent of men and 30 per cent of women are financially literate, according to the study.
If you want to know if you make the grade, try out the questions below. Answers are at the bottom of the page, and you must answer three out of four correctly to be deemed “financially literate”.
The questions:
1. Risk diversification
Suppose you have some money. Is it safer to put your money into one business or investment, or to put your money into multiple businesses or investments? [one business or investment; multiple businesses or investments; don’t know; refused to answer]
2. Inflation
Suppose of the next 10 years the prices of the things you buy double. If your income also doubles, will you be able to buy less than you can buy today, the same as you can buy today, or more than you can buy today? [less; the same; more; don’t know; refused to answer]
3. · Numeracy (interest)
Suppose you need to borrow 100 dollars. Which is the lower amount to pay back: 105 dollars or 100 dollars plus three percent? [105 dollars; 100 dollars plus three percent; don’t know; refused to answer]
4. Compound interest
Suppose you put money in the bank for two years and the bank agrees to add 15 percent per year to your account. Will the bank add more money to your account the second year than it 3 did the first year, or will it add the same amount of money both years? [more; the same; don’t know; refused to answer]
The answers:
1): multiple businesses or investments; 2) the same; 3)100 US dollars plus three per cent ; 4)more.
