Just one-third of adults around the globe have a basic grasp of money matters such as inflation and interest, a new report shows.
Among the 148 nations included in Standard & Poor’s Ratings Services Global Financial Literacy Survey, the United States placed 14th, with 57% of adults demonstrating financial literacy in risk diversification, inflation, numeracy and compound interest.
Scandinavian countries had the best understanding of financial concepts, with Norway, Denmark and Sweden each having 71% of residents with a passing score. Next were Israel and Canada (both 68%), the United Kingdom (67%), and the Netherlands and Germany (both 66%).
At the bottom of the survey rankings were Yemen (13%), Albania and Afghanistan (both at 14%), and Somalia and Angola (both at 15%).
Worldwide, there were gender-based differences in the understanding of money issues, with about 35% of men passing as financially literate compared to 30% of women. Similar variations were found in highly developed and less-developed nations alike.
Financial ignorance can come with a steep price. People who aren’t familiar with the concept of compounding interest may spend more on transaction fees, run up more debt and pay higher interest rates on loans. Many, especially the poor and women, can’t access banking and financial services, which keeps them out of money markets.
The first-ever survey included data from approximately 150,000 adults, which was compiled by Gallup, the World Bank and George Washington University. Respondents were considered financially literate if they correctly answered questions about three of the four concepts.
Among the questions:
The survey comes at a time of record enrollment for college accounting programs in the United States. A recent report from the American Institute of CPAs (AICPA) found that more than 253,000 students enrolled in undergraduate- and graduate-level accounting programs during the 2013-14 academic year, an increase of 5% from 2011-12.
Projections are optimistic for accounting grads entering the job market, as hiring rose 7% in 2014, the report noted. Additionally, about 90% of accounting firms said they expected their recruitment to maintain or exceed that pace in 2015.