Survey points to importance of financial education

Financial education can help people avoid business traps, and specifically, Chinese people need more education on how to effectively combine knowledge and skills, a survey has found.

According to the China Residents Financial Literacy Report compiled by the Shanghai Advanced Institute of Finance (SAIF) under Shanghai Jiaotong University and Charles Schwab & Co Inc, Chinese residents achieved an average score of 64.4 out of 100 – in the upper middle level across the world.

The survey, with more than 10,000 effective samples, divided financial literacy into two categories, namely, knowledge and skills. It said respondents showed a better grasp of financial knowledge, scoring 68, compared with 65.2 in financial skills. But when facing questions about applying financial knowledge concepts to decision-making, respondents scored only 47.7.

"This study revealed the need for targeted financial education using different methods and with varying content to meet the diverse needs of different groups," said Wu Fei, a professor at SAIF.

"People know terms like inflation, interest rates or diversification, but in real life, they are not quite aware of their importance."

The survey was released on Wednesday, World Consumer Rights Day, since all people become consumers once they spend money.

It found that respondents under 18 years of age and those above 65 years were relatively weak in financial literacy, which explained why they were more susceptible to business traps and scams.

"We need systematic financial education to help people become better consumers and investors, and help them achieve their financial goals," said Lisa Hunt, managing director and head of International Charles Schwab.