In the last months, we worked together with 2 master students Economics and Business Administration at the University of Ghent. Flor and Emile engaged to get deeper insights into how individuals deal with finances, financial literacy, how we feel about banks and banking apps, ... In short, a substantive deep insight that should benefit our own app.
More than 300 people filled in the survey, whereby we tested various hypotheses against reality. A literature study across national borders was tested against our Belgian market. Some of the most important insights are shared below.
1. Financial literacy
We asked 3 simple questions:
- only 61% could answer these questions correctly
- 53.62% of the Flemish respondents who did not obtain a professional or academic bachelor or master made an error in at least one of these 3 questions.
- Of the Flemish respondents who obtained a higher diploma, 32.96% made at least one mistake.
Below are the 3 questions and do the test yourself. You can find the correct solution at the bottom of the article.
1) Say you have €100 in your savings account and the interest is 2% per year. How much do you think you will have in your savings account after 5 years, if you decide not to withdraw any money from your savings account in the meantime?
- A: More than €102
- B: €102 exactly
- C: Less than €102
- D: I do not know
2) Imagine that the interest on your savings account is 1% per year and inflation is 2% per year. Would you then after 1 year put the money in your savings account...
- A: Be able to buy more than today
- B: Being able to buy exactly the same as today
- C: Be able to buy less than today
- D: I do not know
3) One individual share of a company provides a safer return than an equity fund.
- A: Wrong
- B: right
- C: I don't know
2. Financial education
We asked some questions and tried to find out who should be responsible for financial knowledge. It was an unequivocal response by both young and old.
- Both young adults (18-28 years) and older people indicated that they hold secondary schools responsible for financial illteracy.
Question was: "I did not get enough knowledge from my secondary education to meet my financial obligations".
- 18-28 year olds: on a scale of 1 (totally disagree) to 5 (totally agree): average 3.612 out of 5.
- TSO/KSO/BSO points more often to the education of ASO students:
- 18-28 year olds leaving TSO/KSO/BSO: average 3.708 out of 5
- 18-28 year olds from ASO: average 3.571 out of 5
- 28+: On a scale of 1 (totally disagree) to 5 (totally agree): 3.223 out of 5
In other countries and specifically in Scandinavia, a finance week is organised every year for schoolchildren to make them aware of money. An initiative that we would certainly support with ROOV.
3. Financial situation
A hot topic in recent months and weeks that we are confronted with more and more. How much do we worry about finances. The results were downright shocking to our limited audience.
- 41.18% of the respondents indicate that they sometimes have difficulty in saving. 13.73% of them said that they have frequent or continuous problems with saving.
- 37.25% of the respondents said that they worry sometimes (30.98%), often (5.49%)/always (0.78%) about their financial situation.
4. Personal administration
Finally, we also wanted to explain another aspect of finance. We have finances, but that also includes personal finance. How do we keep track of everything and how good are our insights?
- Only 57.54% of young adults (18-28 years) say they keep a central record of their income and expenditure.
- The situation is even worse for older respondents (+28 years): only 48% say they keep a central overview of their income and expenses.
- 14% of respondents said they did not have a clear overview of their costs.
- 36.47% of the respondents do not know how their expenses per cost group compare to their peers.
Our analysis after a fantastic cooperation with Flor and Emile (if they want recommendations from an employer, they can always contact me 😊) was one that was both hopeful and instructive. There are still many challenges around finance and financial illiteracy. A working point that needs to be linked between governments and Fintech companies like us. In the coming months, we will therefore commit ourselves specifically to developing the insights and applying them in our own app.
If you would like further information about the research, please send an e-mail to email@example.com.
Answers: 1A, 2C, 3A