How financially literate are Indians, Filipinos, Indonesians?

Dubai: Having the knowledge on how money works is something people from all walks of life can benefit from.

With the right financial understanding and skills, it is easier to make sound decisions around personal finances, from choosing a mortgage to investing for retirement.

A number of studies, however, have shown that a lot of people continue to struggle with the basic financial concepts. 

According to a new research by MasterCard, the financial literacy levels across the Asia Pacific region have shown a marginal pull back, with 12 of the 16 countries surveyed registering lower scores in the latest Financial Literacy Index.

MasterCard’s Financial Literacy Index measures the progress of financial literacy in India, Philippines, Malaysia, Bangladesh, Indonesia, Thailand, Vietnam, Japan, China, Korea and Myanmar among others.

Among the countries monitored, only India, Indonesia, Vietnam and Taiwan showed improvement in their scores in 2014 compared to a year ago. The other markets, including the Philippines, Malaysia, Bangladesh, Thailand and Singapore recorded lower scores.

Indians don’t rank higher than most of their counterparts in Asia, but they do have shown the most improvement in literacy scores between 2013 and 2014, placing 12th overall and nearly at par with Koreans at 13th.

Overall, people from Taiwan are the most financially literate, followed by New Zealand, Hong Kong, Australia and Malaysia.

Singapore’s financial literacy registered the most significant decline, falling from the second to the sixth place, while Japan remains in the bottom spot.

MasterCard’s study was conducted for the fourth time between July and August 2014. The findings were released only last week.

According to the experts, the majority of consumers in the Asia Pacific region know how to budget and save regularly, but many of them have a poor grasp of other financial concepts, including retirement funds, the risks associated with investment, inflation and asset diversification.

“In both developed and emerging markets, people are struggling to understand the basic financial concepts such as inflation. In addition, while Asia Pacific is a region of savers, the lack of retirement planning should cause particular concern,” said T.V. Seshadri, MasterCard group executive, global products and solutions, Asia Pacific.

Financial Literacy Index (country ranking and score)

Source: MasterCard