EU citizens are not doing well when it comes to financial literacy. Nearly half lack an understanding of basic financial concepts, including inflation.

EU citizens are not doing well when it comes to financial literacy. Nearly half lack an understanding of basic financial concepts, including inflation.

A third of Europeans do not understand how inflation works, according to a survey by Eurobarometer. The same survey revealed only 18% of EU citizens were able to show a high level of financial literary.

According to the survey, 65% of EU citizens are aware that, in times of positive inflation, the purchasing power of their money decreases, meaning they can buy less than they could before with the same amount of money.

Lack of knowledge about inflation could be seen as concerning

In October 2022, the annual inflation in the EU reached levels not seen before in the previous four decades at 11.5%. While the rising cost of living was the most pressing worry for 93% of Europeans at that time, apparently a third of EU citizens do not know how inflation affects their lives.

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The best performers were the Netherlands (43%), Denmark (40%), Finland (40%) and Estonia (39%) where about four in 10 respondents display a high level of financial knowledge.

Romania and Portugal reported the worst scores in high levels of financial knowledge at 13% and 16%, respectively.

  • sbv@sh.itjust.worksEnglish
    231·
    7 months ago

    The questions weren’t about esoteric financial instruments that allow the rich to get away with murder, they were home ec style questions:

    Stuff like

    • Imagine that someone puts €100 into a savings account with a guaranteed interest rate of 2% per year. They don’t make any further payments into this account and they don’t withdraw any money. How much would be in the account at the end of five years, once the interest payment is made?

    • Now imagine the following situation. You are going to be given a gift of [€1,000] in one year and, over that year, inflation stays at 2%. In one year’s time, with the [€1,000], will you be able to buy: [more, less, or the same]

    • Which of the following is true? An investment with a higher return is likely to be: [more risky, less risky]

    Maybe part of the reason governments keep bailing out bad financial moves by private companies is because the electorate has decided investing is black magic and ignores it.

    • AmidFuror@fedia.io
      9·
      7 months ago

      Thank you for starting a sensible comment thread. Unless we plan to go back to bartering, basic financial literacy is important. It doesn’t make you an evil exploiter to understand that we use money as a go-between for trading goods and services and what the consequences of that can be for someone trying to build a life or business.

      • sbv@sh.itjust.worksEnglish
        5·
        7 months ago

        Unless we plan to go back to bartering, basic financial literacy is important. It doesn’t make you an evil exploiter to understand that we use money

        Pretty much this. If people have a better understanding of how our system is supposed to work, they’ll get angry when the rich bad people take advantage of it.

    • Blue_Morpho@lemmy.worldEnglish
      61·
      7 months ago

      €100 into a savings account with a guaranteed interest rate of 2% per year. How much would be in the account at the end of five years, once the interest payment is made?

      That’s an insanely hard problem to know the equation and do it in your head. Because the interest compounds (current year plus interest adds to last year’s total).

      The equation is P( (1+r/n)^t*n -1)

      • Sirence@feddit.deEnglish
        2·
        7 months ago

        If someone asked me to calculate it in the street I would be blue screening but here it was a multiple choice with the options set in a way that you don’t really have to calculate compound interest at all, you just had to know it exists (over 110€).

  • Skua@kbin.social
    9·
    7 months ago

    Fascinating how Finland has one of the best literacy scores and worst behaviour scores. Apparently Finns understand how to be financially responsible and simply do not care for it

  • AutoTL;DR@lemmings.worldBEnglish
    1·
    7 months ago

    This is the best summary I could come up with:

    The best performers were the Netherlands (43%), Denmark (40%), Finland (40%) and Estonia (39%) where about four in 10 respondents display a high level of financial knowledge.

    While the scores of France and Italy were slightly below the EU average, this figure was noticeably low in Spain at 19%.

    Proportion answering this question correctly (“Less than you could buy today”) was below 60% in Cyprus, Portugal, Greece, Romania, and Italy whereas Finland and Estonia had the highest share at 84%.

    The proportion with a high score varied between from 11% in Portugal and Latvia to 27% in Denmark, Slovenia and Sweden, and 28% in the Netherlands.

    To illustrate, when participants were asked whether they keep track and monitor their expenses, only 16% in Finland replied, “completely agree”.

    The EU is working to ensure that its citizens have the knowledge and skills they need to make good financial decisions.

    The original article contains 872 words, the summary contains 148 words. Saved 83%. I’m a bot and I’m open source!