> *Financial literacy is knowledge and understanding of financial concepts and risk and the skills, motivation and confidence to apply such knowledge and understanding in order to make effective decisions across a range of financial concepts, to improve the financial well-being of individuals and society and to enable participation in economic life.* (Dr. Annamaria Lusardi, discussed the podcast below.)
> *Financial literacy is the ability to understand essential financial concepts in making informed decisions about saving, investing and borrowing.* (S&P’s Global Financial Literacy Survey )
> **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?
> **Inflation** Suppose over 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?
> **Numeracy (Interest)** Suppose you need to borrow 100 US dollars. Which is the lower amount to pay back: 105 US dollars or 100 US dollars plus three percent?
> **Compound Interest 1/2** 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 did the first year, or will it add the same amount of money both years?
> **Compound Interest 2/2** Suppose you had 100 US dollars in a savings account and the bank adds 10 percent per year to the account. How much money would you have in the account after five years if you did not remove any money from the account? [more than 150 dollars; exactly 150 dollars; less than 150 dollars; don’t know; refused to answer]
> A person is defined as financially literate when he or she correctly answers at least **three out of the four** financial concepts described above.
r/PORTUGALCYKABLYAT
Ex-USSR data on this map is shit. Commies taught people communist magic instead of economy. In 1990s attempts to introduce something better were slow and underfunded. I was finishing a relatively cool school in 2000s and we still had minimal coverage of subject. Bros in the neighborhood were like: economy? u wat mate? u guys learn strange things there.
Popularity of microcredit aka 350%+ yearly interest organizations proves my point.
I’d love to see this same map for the USA state by state!
I worked in a bank in Switzerland for a while.
You wouldn’t believe how many people with an income around 4’000/month and 0 savings applied for a credit of 40’000 for a CAR.
Glad to see I am in a strong minority!
Looked at the source, seems quite valid. It was mostly about people understanding basic concepts like inflation, which imo is a valid measurement of financial literacy.
I would laugh at Italy, but knowing that their fuck-ups might land on our tables I won’t
There’s no need to know what to do with money when you don’t have it.
I think most is thanks to the banks that makes it more accessible
Not surprising considering we were barely taught anything concerning economics during our basic educational formation
Surprised the UK is so high here as I am often gobsmacked at some of the posts in /r/ukpersonalfinance, I dont think I ever received any financial advice growing up but I know how much money comes in to my account each month and not to spend more than that whilst many people seem to think its okay to spend 50% of their take home on leasing a car.
15 comments
wtf is that?
[Original survey report](https://gflec.org/wp-content/uploads/2015/11/3313-Finlit_Report_FINAL-5.11.16.pdf?x28148).
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**What is financial literacy?**
> *Financial literacy is knowledge and understanding of financial concepts and risk and the skills, motivation and confidence to apply such knowledge and understanding in order to make effective decisions across a range of financial concepts, to improve the financial well-being of individuals and society and to enable participation in economic life.* (Dr. Annamaria Lusardi, discussed the podcast below.)
> *Financial literacy is the ability to understand essential financial concepts in making informed decisions about saving, investing and borrowing.* (S&P’s Global Financial Literacy Survey )
—–
More links:
* [Financial literacy around the world](https://cdn.howmuch.net/articles/1-financial-literacy-fe98.jpg).
* [More maps here](https://howmuch.net/articles/financial-literacy-around-the-world).
* [Rational Reminder podcast interview with Dr. Annamaria Lusardi](https://www.youtube.com/watch?v=QcB-zu0_YhI) with an excellent discussion about financial literacy.
—–
The questions:
> **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?
> **Inflation** Suppose over 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?
> **Numeracy (Interest)** Suppose you need to borrow 100 US dollars. Which is the lower amount to pay back: 105 US dollars or 100 US dollars plus three percent?
> **Compound Interest 1/2** 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 did the first year, or will it add the same amount of money both years?
> **Compound Interest 2/2** Suppose you had 100 US dollars in a savings account and the bank adds 10 percent per year to the account. How much money would you have in the account after five years if you did not remove any money from the account? [more than 150 dollars; exactly 150 dollars; less than 150 dollars; don’t know; refused to answer]
> A person is defined as financially literate when he or she correctly answers at least **three out of the four** financial concepts described above.
r/PORTUGALCYKABLYAT
Ex-USSR data on this map is shit. Commies taught people communist magic instead of economy. In 1990s attempts to introduce something better were slow and underfunded. I was finishing a relatively cool school in 2000s and we still had minimal coverage of subject. Bros in the neighborhood were like: economy? u wat mate? u guys learn strange things there.
Popularity of microcredit aka 350%+ yearly interest organizations proves my point.
I’d love to see this same map for the USA state by state!
I worked in a bank in Switzerland for a while.
You wouldn’t believe how many people with an income around 4’000/month and 0 savings applied for a credit of 40’000 for a CAR.
Glad to see I am in a strong minority!
Looked at the source, seems quite valid. It was mostly about people understanding basic concepts like inflation, which imo is a valid measurement of financial literacy.
Also there was an interesting link between mathematical skills and financial literacy. [Full report here.](http://gflec.org/wp-content/uploads/2015/11/3313-Finlit_Report_FINAL-5.11.16.pdf?x28148)
My first hand warmer : https://www.thewarm-heart.com/
Portugal, what are you doing?
I would laugh at Italy, but knowing that their fuck-ups might land on our tables I won’t
There’s no need to know what to do with money when you don’t have it.
I think most is thanks to the banks that makes it more accessible
Not surprising considering we were barely taught anything concerning economics during our basic educational formation
Surprised the UK is so high here as I am often gobsmacked at some of the posts in /r/ukpersonalfinance, I dont think I ever received any financial advice growing up but I know how much money comes in to my account each month and not to spend more than that whilst many people seem to think its okay to spend 50% of their take home on leasing a car.