July 18, 2012
Research on Day-to-day Financial Planning Led by Mature Markets; Women in Emerging Markets Fare Better than Men on Basic Money Management
Singapore, 18 July 2012 – People in mature markets may prove to be better financial planners overall but it is women in emerging markets who remain dominant when it comes to basic money management, according to MasterCard research.
The MasterCard Worldwide Index of Financial Literacy is based on a survey conducted between 24 April 2012 and 10 June 2012 with 6904 respondents aged 18 – 64 in 14 Asia/Pacific countries. This is the 3rd survey of Financial Literacy conducted since 2010. The survey polled consumers on three aspects of financial literacy including their basic money management skills, investment knowledge and financial planning to determine the level of basic money management skills in terms of budgeting, savings, and responsibility of credit usage. The survey and its accompanying reports do not represent MasterCard financial performance.
In terms of overall financial literacy, Taiwan and New Zealand tied for first place with a score of 73 index points each, with Taiwan jumping up from 5th rank in 2010. Following close behind with 71 index points each are Hong Kong, Australia and Singapore. Notably, Hong Kong jumped up from 6th position when the survey was conducted in 2010. Thailand, first in the region two years ago, fell 10 rankings to 11th in 2012 with 65 index points. Japan and India ranked at the bottom of the financial literacy rankings with 60 index points each.
New Zealanders (77%) fared the best when asked about basic money management skills such as day-to-day budgeting, keeping up with bills, credit commitments and setting money aside for big purchases, followed by Australia in 2nd (75%) and Hong Kong (72%) moving up one spot from 4th in 2010 to 3rd in 2012.
Hong Kong (68%), Taiwan (67%) and China (65%) topped the investment component of the research. More respondents in these markets understood their bank statements and complex investment concepts such as diversification and inflation.
Women showed slightly better scores than men in Asia/Pacific’s emerging markets with Philippines leading the region with financial literacy scores that were 9% better than men’s, followed by Vietnam (6%) and Malaysia (5%).
Koreans proved to have the region’s most improved scores for financial planning (83%) up 12 places from the 2010 survey. Survey respondents from Taiwan (83%) and Vietnam (82%) also saved more regularly and were better prepared than their regional counterparts when it came to retirement preparations and emergency savings.
In mature markets, respondents over 30 years of age appeared to score higher in financial literacy compared to their counterparts under the age of 30. This was especially seen in markets like New Zealand (76% vs. 65%), Australia (74% vs. 64%) and Taiwan (74% vs. 70%) where respondents over 30 years old were clearly leading the pack.
Georgette Tan, group head, Communications, Asia/Pacific, Middle East & Africa, MasterCard Worldwide, said: “Overall the MasterCard Worldwide Index of Financial Literacy paints a promising picture of financial understanding across the region. Households in Asia/Pacific are clearly taking responsibility when it comes to day-to-day financial planning, and it’s interesting to note that a growing proportion of women are taking the lead in financial matters. Notably, women in emerging markets continue to exhibit strong money management skills and this is a very encouraging sign.”
The Index is based on a survey of consumers from 25 markets across APMEA and comprises questions covering three major components:
- Basic Money Management (50% weight): To determine the level of basic money management skills in terms of budgeting, savings, and responsibility of credit usage.
- Financial Planning (30% weight): To assess level of knowledge about financial products, services, and concepts, and ability to plan for long-term financial needs.
- Investment (20% weight): To determine basic understanding of the various risks associated with investment, different investment products and skills required.
A Financial Literacy Index Score for each market was calculated out of the weighted sum of the 3 components.
Regional Aggregates are calculated via the average of the individual country components before applying the weights described above.
Interviews for the MasterCard Worldwide Financial Literacy Index were conducted via internet surveys, personal, telephone and Computer Aided Telephone interviews, with the questionnaire translated to the local language wherever appropriate and necessary.
MasterCard (NYSE: MA), www.mastercard.com, is a technology company in the global payments industry. We operate the world’s fastest payments processing network, connecting consumers, financial institutions, merchants, governments and businesses in more than 210 countries and territories. MasterCard’s products and solutions make everyday commerce activities – such as shopping, traveling, running a business and managing finances – easier, more secure and more efficient for everyone. Follow us on Twitter @MasterCardNews, join the discussion on the Cashless Conversations Blog and subscribe for the latest news.