Irish adults among worst in the world for everyday skills with their finances
FINANCIAL literacy skills among adults in this country are low, according to a new survey.
It shows that a third of adults struggle to work out how much change they should get in a shop.
The international research, carried out by Cambridge University and University College London, found “striking weaknesses” in money skills across a number of countries.
Ireland came near the bottom in the survey.
Financial literacy is broadly defined as the possession of the set of skills and knowledge that allows an individual to make informed and effective decisions with all of their financial resources.
Low levels of financial literacy have been blamed for the build-up of the property bubble, with both consumers and bankers being accused of having poor financial skills.
The British researchers analysed more than 100,000 results from people between the ages of 16 and 65, from 31 countries, using a special test.
As part of this test, adults were asked four money-related questions they could be expected to have to answer as part of their day-to-day lives.
The researchers concluded: “A substantial number of people lack the basic skills that are needed to solve everyday financial tasks.”
The study, ‘The Financial Skills of Adults Across the World’, found about a third of Irish adults could not work out how much change they should receive from a shop when buying a handful of goods.
Roughly two-in-five adults here struggled to work out the price they had to pay for a product when they were given a per unit cost, for example, per litre or per kilogram.
Two-thirds of those surveyed could not read a simple financial line graph – the type often used to convey key information about pensions, investments and the economy, according to financial analyst Frank Conway, who uncovered the research.
The findings placed Ireland near the bottom of the survey.
Most people struggled to calculate discounts involving more complex calculations, such as the price of season tickets to sporting events.
Adults in Estonia, Finland and Japan performed well across all four tasks. Those in Ireland, Turkey, Chile, Israel, Italy, Spain and England and Northern Ireland had among the weakest financial skills.
Mr Conway, who founded MoneyWhizz, which works with schools and employers to teach personal financial skills, said consumers today have far more responsibility for their longterm financial well-being.
“Yet, few have the necessary skills to make informed financial decisions,” he said.
He said it is important that consumers have meaningful financial education on key concepts, including investing, the time-value of money, compounding and tax reliefs so they are better prepared for their future financial needs.