Jan 142016

Financial Literacy Around the World

Only 1/3rd of the world’s adult population is financially literate according to a report by S&P and the World Bank. The research looked at the response from 150,000 people from 140 different countries in 2014. Subjects were asked to answer a series of questions that measure fundamental personal finance concepts. There were 4 questions in total. The last question was split into two parts. Only one part needed to be answered correctly in order to get a passing mark for that question.

A person is considered financially literate when he or she correctly answered at least 3 out of the 4 financial questions. Based on this definition, the study determined that 33% of adults worldwide are financially literate.

68% of Canadians are Financially Literate

The Scandivania countries topped the rankings in a three-way tie. Canada and Israel tied for 4th place. The United States may be the world’s richest country, but it came in at 14th place, which is still in the top 10% of all the countries that participated. 🙂


The report notes that most people in major advanced economies are financially literate. But in contrast, the major emerging economies such as Brazil, India, and South Africa have a financial literacy rate of only 28% on average.

It’s sad how developing economies tend to have a lower rate of financial literacy because those are often the countries that face the worst financial problems. The financial literacy rate in Puerto Rico is only 32%. It defaulted on its $174 Million debt payment earlier this month because it literally ran out of money. It still owes over $70 Billion and more defaults are expected to come. One of its options is to file for Chapter 9 municipal bankruptcy so it can ask the U.S. Congress for debt relief. If nothing is done then the worsening financial problems could turn into a humanitarian crisis. Puerto Rico’s economy is slowly becoming a basket case. The small island territory appears to have more issues than MoneySense magazine.

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Feb 152015

A new study by the University of Pennsylvania’s Wharton School found that adults in many countries make money decisions with surprisingly little financial knowledge. Researchers asked people in 18 countries THREE simple financial literacy questions about interest rates, inflation and investing.

When Americans over 50 years old were asked these 3 questions, only 50% could answer the first two questions correctly. Furthermore, just 33% knew the correct answer to all three questions. “Even well-educated people are not necessarily savvy about money,” according to the report. Among people with post-graduate degrees, 64% were able to ace the quiz. That’s better than the average, 🙂 but still less than my expectations.

Do you think you are smarter than most Americans? According to the report, answering each additional question correctly is associated with a 3% to 4% greater probability of planning for retirement.


The Wharton study found that men (38%) were more likely than women (23%) to know the answer to all three questions. The guys also claimed to feel more confident about their financial knowledge, even when they answered incorrectly. The ladies, on the other hand, were more likely to admit that they didn’t know the answer to a question. Women are so modest. 😳

So how many did you get right on your first try? Feel free to spoil the answers below in the comments section if you think you know the correct answers. 😉 I’ll verify by tomorrow. Financially literate individuals save more, earn more on their investments, and manage their money better. So if you got 3 out of 3 correct then congrats! Your financial future is looking bright. 😀 Otherwise, keep brushing up on your personal finance knowledge. 🙂

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Sep 042014

I recently saw a list of financial milestones on The Money Pincher. Ideally all 30 in the list should be achieved when one turns 30 years old 🙂 I still have a few more years to go before turning 30, but I thought it would be interesting to give it a shot anyway 😀 The milestones I’ve already hit are written in green.

The List of Financial Milestones

1. Financially independent of your parents.
Moved out at 21.

2. Debt free.
Nope, and probably won’t be for awhile lol.

3. Out of overdraft.
Never used it before.

4. Established good credit history.
Nope, my credit score dropped last year because of excess credit risk.

5. Have $25,000+ saved for retirement.
Over $50,000 in my retirement savings plan.

6. Started an investment portfolio.
Yarp 🙂

7. Established an emergency fund.
I don’t have one yet.

8. Properly insured.
I don’t have collision insurance for my car.

9. Maximizing employer benefits.
We have free coffee at work but I don’t drink it.

10. In the habit of tracking your spending.
I try to stick to a budget 🙂

11. Done with impulse purchases.
I still buy random stuff sometimes.

12. Willing to spend where it counts.
Of course, YOLO 😀

13. In the habit of regularly checking your credit report.
Once a year.

14. On top or ahead of all your monthly bills.
Pay all my bills on time.

15. At least one big splurge you saved up for and paid in full with cash.
Every major purchase in the past has been bought with the help of bank credit.

16. An understanding of personal income taxes and how to minimize what you pay.
I need to do more research into maximizing tax efficiency.

17. Diligently saving for a big purchase.
Don’t want anything at the moment.

18. A clear direction of your career.
I enjoy my work and have set professional goals.

19. A profitable side income.
I teach art part time.

20. A positive, growing net worth.
Not hard to do when the stock market keeps hitting new record highs.

21. A BHAG for your finances. BHAG stands for “Big Hairy Audacious Goal”.
Be financially free by 35.

22. An understanding and a plan of how your money will deliver the lifestyle you want.
I have confidence in my financial plan.

23. So over measuring your finances against that of your friends.
I still do this. It’s hard not to 😛

24. Less consumption-oriented.
I like having stuff. My gold coins from the Canadian mint will last forever.

25. A healthy relationship with credit cards.
I pay off my credit card balance almost every month.

26. A regular contribution to charity.
I need to do this more regularly.

27. If you’re part of a couple, a healthy way of sharing money with your partner.
Don’t have a partner yet.

28. A commitment to putting free or cheap before convenient.
I try to be frugal whenever I can but I’m not committed to it. I still buy stuff from 7-11 sometimes.

29. Done paying unnecessary fees.
I pay $3.95 a month for bank fees because I don’t keep the minimum balance.

30. An understanding and appreciation for the reality that money is only a tool of exchange, and not worth obsessing over.
I’m very emotionally attached to my money 😐

14-09-tunnel_of_love_relationship_money 30 financial milestones

Whew, some of these are not easy. Overall I achieved 14 out of 30. Not bad, but it looks like I still have some ways to go. I wonder how many people can score higher than me 😀 Other than being a fun quiz, the list is also a practical guideline for a quick personal finance check-up.

Random Useless Fact:
Some animal activists are more violently opposed to fur than leather because it’s easier to harass rich people than motorcycle gangs.