Northern Ireland’s financial literacy lags peers according to new Bank of Ireland study

A Financial Literacy Score1 Index, commissioned by Bank of Ireland and conducted by Red C, has revealed that Northern Ireland has an average financial literacy score of 53%, with just over half of test questions answered correctly.  The Index also reveals a striking difference across gender and age, with women scoring almost 10% lower than men. Overall, 18-24 year olds score lowest (42%) with the highest score for those between 45-64 (58%).

Compared to the Global S&P Financial Literacy survey2, the most recent closely comparable global study, carried out in 2015, Northern Ireland’s score of 53% significantly lags peers including Australia’s at 64%, Germany at 66%, and the USA on 57%. Northern Ireland’s Financial Literacy score does however compare more favourably with France at 52%.

The Financial Literacy Index also found that less than a third (29%) feel knowledgeable about financial matters. While one third claim to know about mortgages, only one fifth say they are familiar with investments and pensions. Encouragingly, almost two thirds (67%) said that they review their finances personally each month.

 

Key findings:

  • There is a striking difference across demographics – those aged 18-24 score lowest at 42% with the highest score of 58% achieved by those between 45-64.
  • Socio-economic factors also play a part with the highest overall average score of 59% among ABC1s, compared to C2DE at 48% average score.
  • Financial literacy is a gender issue too. Women in Northern Ireland score almost 10% lower than men (49% answered correctly by women versus 58% by men).
  • 26% of those who took part got less than 10 questions correct and would be considered to have very poor financial literacy.
  • The best scores are achieved on basic numerical tests where 70% were answered correctly and prices with 69%
  • Knowledge of savings and tax reliefs was lowest, with 34% of answers scored correctly on savings and 22% on tax relief
  • All groups do poorly on ways to reduce credit card interest with just 24% able to identify all ways to reduce interest on credit cards

Dawn Bailey, Head of Financial Wellbeing, Bank of Ireland said: “The right financial decisions can have a critical impact on our lives. If we are more financially knowledgeable and literate, we are better placed to make sound choices and improve our financial wellbeing.

“Good financial habits, like any positive habits, begin at an early age. That’s why we continue to invest in our financial literacy programme for schools, including our Financial Wellbeing resources for 16-18 year olds and our primary and secondary school financial education programmes delivered in partnership with Young Enterprise NI.

“Recognising that financial literacy plays an important part throughout our lives, we have also developed a series of free financial resources which are available to parents, teachers, community groups and employers, ensuring access to financial literacy and wellbeing support at all life stages.”

Bank of Ireland’s commitment to financial well-being in 2022 saw the delivery of financial education programmes to over 5,000 young people in 84 schools across Northern Ireland, in addition to 450 hours of virtual financial wellbeing session delivery to community and voluntary groups, with appetite for financial literacy sessions continuing to grow in 2023.

Draperstown based voluntary charity S.T.E.P.S. who work to awareness in their community of Suicide prevention and Mental Health support, requested Bank of Ireland’s support to deliver a financial literacy session to students at St Colm’s High School after the students advised that financial planning and understanding was important to their personal development and to having good mental health.

Speaking after the session, Karen McGuigan, S.T.E.Ps said: “It’s great to see young people want to learn and make informed financial decisions as these are areas which can have a significant impact on wellbeing and mental health, especially as young people prepare to make the move to university or into employment. The session from the Bank of Ireland team was so informative and delivered in a way that met the students’ needs and expectations and I have no doubt that they will apply that learning in a practical way for many years to come.”
 

Research sources:

1.The Financial Literacy Score study was completed with a nationally representative sample of n=758 adults aged 18+ living in Northern Ireland.

The Financial Literacy Score is calculated based on respondent’s knowledge on a wide range of common financial situations. It uses 24 questions across nine areas including basic numerical tests, prices, tax reliefs, savings, investments, credit cards and personal loans, mortgages and pensions.

2. International comparisons are made to the most recently available comparative study. The S&P Global FinLit Survey is a global measurement of financial literacy, probing four basic financial concepts: risk diversification, inflation, numeracy, and compound interest.

Bank of Ireland financial literacy resources are available at: FinancialWellbeing Team – Bank of Ireland UK