Being financially healthy depends more on your approach to time, rather than your ability to calculate compounding interest. Just because you think you are financially literate, does not mean you will be financially healthy.Scroll down to see the results
Historically, people believed financial literacy correlated directly with financial health. Financial literacy courses often cover the math associated with money and basic product knowledge. However, the results of this survey show your time perspective impacts how you make financial decisions. Understanding your time perspective is an important foundation for financial health and should be included in financial literacy training. Below are some of the results:
Millennials think they are less financially literate, but demonstrate better financial health than baby boomers.
The US was in the middle of the pack. 33% of the population demonstrated a high degree of financial health. Although better than Brazil (which came in last at 14%), we are still a long way behind the UK, which clocked in at 52%.
52% of the UK population scored high in financial health. As a nation, they are one of the biggest memory hoarders. Living in the past means you are less likely to take crazy risks and more likely to avoid bankruptcy. The UK also shows a high level of confidence, with more people self-rating as highly literate than any other country.
We asked how financially literate do you think you are? No one scored themselves lower than Germany. But there was no reason for that. When we looked at financial health, Germany finished second in the world (at 41%), behind only the UK - and well ahead of Brazil.
Hong Kong has the highest level of present fatalism in the survey. A belief that fate controls your life often leads to excessive risk-taking and gambling. Those risks and gambles gave Hong Kong the highest % of financially sick (7.9%) in the study. And they had one of the lowest percentages of financially healthy (17%) in the study, just ahead of Brazil.
Only 14% of Brazilians demonstrated a high level of financial health, the lowest in the study. A high level of present hedonism in the country is certainly a contributing factor.
Sicilian culture is known for enjoying family, food, wine and the Sicilian sun. The high present hedonism is a reflection of that. Unfortunately, present hedonism does not always lead to the most financially healthy lifestyle, which the report shows, as only 18% of Sicilians are financially healthy.
Being an A+ math student or financially literate doesn’t necessarily equal a higher degree of financial health.
There is a direct link between people’s approach to time and their financial health.
These people base their decisions and actions on memories rather than current experience. They tend to be more conservative and take less risk. They will be less likely to go bankrupt or experience foreclosure, but more likely to have missed out on stock market appreciation.
One way to be stuck in the past is to be ‘past positive’ (like, say, reliving your high school days over… and over… ).
These hedonists take what they want, when they want, without any thought of future consequences. They grab candy at the checkout line, are more likely to partake in risky behaviors, and buy drinks for everyone in the bar, even if it puts them in debt.
A great example of hedonism is buying drinks for everyone in the bar, even when you don’t have the money to do so.
These obsessive planners want to be financially literate and plan for the future, but are more likely to make bad investments or buy excessively expensive insurance when they’re given misinformation or wrong advice.
Many millennials in college are future proofers — studying all night to get ahead while sacrificing other aspects of their lives.
The study was conducted, under the direction of Philip Zimbardo, in 6 countries: the USA, Brazil, the UK, Germany, Italy (Sicily) and China (Hong Kong). A statistically significant sample in each country was given:
Your attitudes towards time have a profound impact on your attitudes towards life and the decisions you make. The ZTPI classified participant’s approach to the past, present and future.
Questions were designed to test mathematical aptitude as it relates to personal finance. For example, people were tested on their ability to calculate compounding interest.
Participants were asked to rate their own level of financial literacy, on a scale of 1-7
A financially healthy individual would be more likely to have paid fewer fees or interest, and carry less debt. A financially sick individual would be more likely to borrow from a non-bank, and would be more likely to have experienced foreclosure or bankruptcy.