New Zealanders Best at Money Management and Continue to Top the Index

Tweet this: #China overtakes #HongKong w the most proficient investors in #AsiaPacific – #MasterCard Index of #FinancialLiteracy http://bit.ly/1cLPC2l

Singapore, 3 July 2013 –New Zealanders have the best basic money management skills in the Asia/Pacific region, but the Chinese have shown themselves to be the most proficient investors, according to MasterCard’s latest research.

The MasterCard Index of Financial Literacy is based on a survey conducted between April 2013 and May 2013 with 7756 respondents aged 18 – 64 in 16 Asia/Pacific[1] markets. This is the 4th 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[2] 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.

On overall financial literacy, New Zealand continued to rank number one with a score of 74 index points, ahead of Singapore (72 index points) and Taiwan (71 index points). Indonesia came third from bottom of the region dropping seven places to 14th with 60 index points, with India and Japan at the bottom with 59 index points and 57 index points respectively.

New Zealanders also came top in overall basic money management (77 index points), which includes skills such as day-to-day budgeting, keeping up with bills, credit commitments and setting money aside for big purchases, just ahead of Australia (75 index points) and Singapore (73 index points). In contrast, respondents from Myanmar and India were the least literate in terms of basic money management, both scoring 54 index points.

At 68 index points, China ranked top in understanding of bank statements and complex investment concepts such as diversification and inflation, ahead of Hong Kong (67 index points) and Taiwan (63 index points). Burmese consumers fared the best in the region for financial planning with 88 index points: they are the region’s most proficient savers for the ‘unexpected and retirement’, ahead of Taiwan (83 index points) and Malaysia (82 index points).

Georgette Tan, group head, Communications, Asia/Pacific, Middle East & Africa, said, “This Index of Financial literacy is a good measure of whether and how people in the Asia/Pacific region are making informed decisions around their home finances. New Zealand is a standout overall, and China has made great strides in improving investment acumen. However, there are divides across our markets that reflect the gap between the developed and the developing. Financial literacy is a concern where a large proportion of society are without the support and education that is taken for granted in the developed world.”

Consumers from the developing markets of Thailand, the Philippines and China showed the most significant progress in the region in overall financial literacy. Women in the emerging markets of Myanmar, Vietnam and China also outscored men in financial literacy, by 7 index points, 6 index points and 3 index points respectively.

The survey found a positive correlation between those married and over 30 years old. Respondents in this demographic tended to have higher levels of financial proficiency in all countries except the Philippines, suggesting the need to be financially savvy becomes more pronounced with marriage and the managing of household expenses, education and other financial commitments. Those under 30 years old tended to have lower financial literacy.

MasterCard Index of Financial Literacy 2013

Ranking

Scores

Overall Financial Literacy Index

Components of Financial Literacy Index

Basic Money Management

Financial Planning

Investment

Asia/Pacific

66

63

77

58

1

New Zealand

74

77

74

63

2

Singapore

72

73

80

58

3

Taiwan

71

68

83

63

4

Australia

71

75

70

63

5

Hong Kong

71

71

72

67

6

Malaysia

70

67

82

62

7

Thailand

68

63

81

61

8

Philippines

68

67

74

58

9

Myanmar

66

54

88

-

10

China

66

58

79

68

11

Bangladesh

63

56

76

60

12

Vietnam

63

57

80

52

13

Korea

62

58

78

48

14

Indonesia

60

56

75

47

15

India

59

50

76

57

16

Japan

57

58

68

39

 

Methodology

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 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 and its Suite of Research Properties

The MasterCard Index suite in Asia/Pacific, Middle East and Africa includes the long-running MasterCard Index of Consumer Confidence, as well as the MasterCard Index of Women’s Advancement, MasterCard Survey on Online Shopping, MasterCard Index of Financial Literacy, and the MasterCard Index of Global Destination Cities. In addition to the Indices, MasterCard’s research properties also include a range of consumer surveys including Ethical Spending and a series on Consumer Purchasing Priorities (covering Travel, Dining & Entertainment, Education, Money Management, Luxury and General Shopping).

MasterCard also regularly releases Insights reports providing analysis of business dynamics, financial policies and regulatory activities in the Asia/Pacific, Middle East and Africa region. Over 80 Insights reports have been produced since 2004. MasterCard has also released a series of four books on Asian consumer insights, authored by Dr. Yuwa Hedrick-Wong, Global Economic Advisor for MasterCard and published by John Wiley & Sons.

About MasterCard

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.

 

Contacts:

Georgette Tan, MasterCard, georgette_tan@mastercard.com, +65 6390 5971

Rob O’Brien, Weber Shandwick, robrien@webershandwick.com, +65 6825 8064


[1] Australia,  Bangladesh, China, Hong Kong, India, Indonesia, Japan, Malaysia, Myanmar New Zealand, Philippines, Singapore, South Korea, Taiwan, Thailand, Vietnam

[2] The investment questions were not asked of Myanmar respondents as Myanmar does not have a functioning stock market.