We also learn while making ends meet
The results of the International Survey of Adult Financial Literacy Competencies for the OECD International Network on Financial Education (OECD/INFE) were recently released in a report.
According to the results of the survey conducted in 30 countries, 17 of them in the OECD, Turkey was 21st among 30 countries in the total evaluation of three main categories. Turkey finished with 12.5 points, behind the OECD average of 13.7; the average of all the participating countries was 13.2 points. The top five countries were France, Finland, Norway, Canada and Hong Kong.
Some 50,000 adults from 30 countries aged 18 to 79 were interviewed for the study measuring their levels of financial knowledge, behaviors and attitudes; 3,003 people participated from Turkey.
The questionnaire was designed to collect information about a wide range of financial literacy topics related to keeping track of finances, making ends meet, longer-term financial planning (including retirement saving) and choosing products.
To sum up the information about Turkey, loaning as a result of inadequate and irregular income, economic fluctuations and financial difficulties have resulted in making us a society that has taught itself in financial matters.
In Turkey, under the daily economic conditions of the household, adults have gained basic financial skills, self-educating themselves.
Questions directed at measuring the financial knowledge level include simple mathematical skills, inflation and purchasing power comprehension, simple interest and interest compounding and risk diversification.
Turkey has good scores in certain main financial knowledge measures; it is a reflection of the experience the population has gained by tackling issues on a day-to-day basis, such as risk and return, the definition of inflation and risk diversification. Turkish participants’ best answers were on the risk and return category; their worst was at calculating compound interest.
Interestingly, the nation that answered “very high and quite high” the most on financial knowledge was Finland.
In Turkey respondents were very modest in their answers. The percentage of people who responded “very high and quite high” was just 12 percent. Most people rated themselves average. In measuring financial knowledge, Turkey is average in the 30 countries.
In the category of financial behavior, the weakest areas were related to budgeting, planning ahead, choosing products and using independent advice.
In Turkey, the rate of respondents who say they have a household budget was 78 percent. This rate is in the top five whereas the average for 30 countries is 60 percent. Low income and poverty seem to make budgeting a must.
In the financial resilience category which includes the ability to cope with external shocks in the short-term, some countries have room for development.
In 30 countries, two in five respondents had not saved in the last 12 months. The rate of active savers was around 59 percent, with the saving champions being Thailand, Norway, France and Canada.
Quite interestingly, Thailand has the highest rate of people who were unable to make ends meet at least once in the last 12 months, totaling 64 percent. In Turkey, this rate is 50 percent. Furthermore, Thailand is again the champion at 45 percent among those who resort to borrowing to make ends meet. Turkey is third in this category at 42 percent. The report said this indicates a high level of financial fragility. Resorting to loans to make ends meet is possibly due to low or fluctuating incomes.
The report emphasizes that financial education that is designed to help people budget and save, even in uncertainty, and to manage existing bills and credit commitments can help people avoid similar situations in the future or reduce their impact.
It is now certain that the topic of financial literacy and competence are primary issues for countries like Turkey.