Financial driving license – Do you have the necessary knowledge about loans and finances?

For several years we have been bombarded with news that the average Swede has limited knowledge of economics. The last issue of our lack of knowledge was on the wall just a few weeks ago when the  Financial Supervisory Authority announced the results in its Report on Household Economics 2017. The results were far from disappointing in all parts, but the report nevertheless led economic writers from every corner of the country to describe the situation as alarming.

Brief on the Financial Supervisory Authority’s report

Brief on the Swedish Financial Supervisory Authority

Every year, the Financial Supervisory Authority looks at clean facts about household finances, ie income and expenditure, savings and investments, and so on. At regular intervals, a study is also conducted on more soft factors such as accounting and general knowledge of personal finance.

The 2017 report shows that the household economy has generally strengthened in recent years. For example, 79 percent of those surveyed said that 2017 had never run out of money at the end of the month. The corresponding figure for 2009 was 69%. The report also reads that overall savings have increased and are more stable.

Perhaps most worrying is that the group of people who have the worst status has not decreased in size in recent years. About 13% of respondents stated in 2017 that they have no opportunity to pay an unexpected bill of USD 20,000 without having to take out loans or use credit cards.

The latter task is in line with what many other studies have shown recently. Gradually, more people are getting a more stable economy, but those who are at a disadvantage are having difficulty improving their situation.

Knowledge about economics is deteriorating

Knowledge about economics is deteriorating

The Financial Supervisory Authority has carried out surveys of so-called financial ability and accounting both in 2010, 2014 and 2017. The latest survey shows that knowledge of finance has deteriorated significantly in just a few years. The greatest deterioration has occurred in basic mathematics such as division and percentage calculation.

It is perhaps not surprising that the best performing age group are those between 40-49 years. The age group with the worst knowledge is the youngest, ie persons between 18-29 years. Of course, there is also a correlation between the number of correct answers and the level of education and income. Perhaps more startling is that men generally appear to receive significantly better scores on accounting and financial ability than women get.

However, in this context it should be said that Sweden is relatively good compared to other countries in terms of knowledge levels. There are a lot of scare examples both in Europe and globally.