A survey conducted by National Irish Bank and its parent company, Danske Bank, has found that young Irish adults are not as financially savvy as their European counterparts.

The research was part of a wider project to gauge levels of financial literacy among 18 and 19-year-olds and their parents in Denmark, Finland, Northern Ireland, Norway, the Republic of Ireland and Sweden.

Irish people fared the worst out of six European countries in their level of basic financial and banking terms. 83 per cent of the young adults surveyed did not understand what APR meant compared to 50 per cent in Finland. However, their parents can't afford to judge, with just 65 per cent understanding the term APR.

Just 22 per cent of young Irish adults understood the term 'disposable income', compared to 54 per cent in Finland. 77 per cent of Irish parents were not able to define the term.

Caroline Douglas, National Irish Bank's Communications Manager said; "It's worrying that young Irish adults have such a poor understanding of financial and banking terms compared to their European counterparts. It's clear that they, and in many cases their parents, do have some difficulty with financial and banking terminology, as well as budgetary matters, and this knowledge gap needs to be bridged."

The research examined the levels of awareness of financial and banking terms such as fixed and variable expenses, interest, APR and disposable income.

61 per cent of Irish respondents believed they had a good understanding of fixed and variable expenses, while a majority had a good understanding of the principles of interest. However, only 17 per cent could explain what an APR was, compared to 50 per cent in Finland. Their parents also struggled with the term, with just 35 per cent able to explain it.

Young Irish people and their parents struggled to identify the cheapest loan offer out of a selection of three different scenarios, with 69 per cent unable to identify the correct option, compared with 47 per cent in Denmark. Their parents also struggled, with 56 per cent failing to answer correctly.

On a positive note, the research indicates a healthy attitude to credit by young Irish people, with those that have an overdraft facility revealing that their account is in credit for most of each month. In fact, 73 per cent said that they don't like borrowing money. 83 per cent of young people surveyed either know exactly or to a greater extent how much is in their account and how much they need for their expenses each month.

Between 2008 and 2010, Danske Bank Group will spend more than €8 million on financial literacy initiatives aimed at children, young people and students. This first initiative involves a series of surveys and analyses which will provide a strong insight into the challenges and opportunities related to financial literacy in the target groups.

Caroline Douglas continued, "The research shows that there is a gap in people's financial knowledge. We believe its important to bridge this gap from an early age. Of course, parents and the education system have a role to play, and we're working closing with key stakeholders in these areas to ensure that the initiatives we launch over the coming months support the systems that are already in place".

Comments (0) »

Show/Hide comment form

Name

Email

Title

Comment

Write the displayed characters

Add Comment