A latest study suggests that two third of the adults all over the world are financially illiterate. Also, there is a five point gap between the financial literacy of men and women.
Yes, the latest study has some rather shocking revelations about financial literacy all over the world. It’s proven once again that people don’t understand or care about Mathematics. Two thirds of the adults worldwide are financially illiterate, according to the study. Where do US stand on the list? Well, US is at the 14th place in the literacy list. Important information is the gap between men and women as far as financial literacy is concerned.
Who is behind this data? Well, it comes from Standard & Poor’s Rating Services. They managed to collect this data via their Global Financial Literacy Survey. How many adults took part in the survey? From 148 countries, more than 150,000 adults took part in 2014. How did the survey work? The participants were asked to test their knowledge of financial concepts that are basic, including:
- Risk diversification
- Compound interest
If the respondents managed to answer the questions correctly about at least 3 of the 4 concepts, then they were considered as financially literate.
Gallup world poll
As far as the data collection is concerned, they relied upon Gallup World Poll. There were other parties too, including Global Financial Literacy Excellence Centre & World Bank Development Research Group as they were in charge of analyzing the data. What is the significance of this survey? It is the world’s most comprehensive and largest global survey on this subject yet.
Who are leading?
Which countries are leading as far as the global financial literacy list is concerned? Well, a good look at it will tell you that Scandinavian countries are definitely leading. Sweden, Denmark and Norway are highly literate on the list. Other countries that made into the top 10 are Israel, Canada, the UK, Netherlands, and Germany etc.
Who is left behind?
Which countries are in the bottom 10 list? Well, you can say that Afghanistan, Albania and Yemen are those countries with less than 15% score. These are the countries with least financial literacy. Even as We Stare at a Global Financial Crisis, many continue to stay in the dark as far as financial literacy is concerned.
When we take a look at the largest economies in the world (or in other words, the G7 countries), Italy came last. Canada came first in the G7 group with 68% financial literacy.
The gender gap
As stated before, the gender gap of 5% is really alarming, but it’s not really surprising. 35% of the men are financially literate while only 30% women are financially literate. The gender gap was phenomenon in all the countries, irrespective of their financial status. It was same in developed as well as poor countries. If we take the case of the US, we can see that men were ahead with a 10% gap. Also, education and income are big factors in the case of US as far as financial literacy is concerned.
As far as US is concerned, it came up with a 57 % score. As stated before, US stands at 14th position. As far as compound interest is concerned, adults had weak knowledge. Compound interest questions were tough for many who had credit cards and home finance. This is something US needs to work on.