Four in 10 adults unable to answer Junior Cert exam question on inflation

Those over 55 are the least likely group to have used technology to help understand their finances better. File Picture: iStock

An overwhelming majority of Irish adults believe they have an “average” or “high” level of financial literacy, but more than 40% could not correctly answer a Junior Cert-level business sample exam question on the impact of inflation on household purchasing power, research shows.

The PTSB Reflecting Ireland research revealed 90% of respondents think they have average or high financial literacy, but only 58% identified that high inflation is bad for their purchasing power, with 27% incorrectly saying it is positive for them, 10% incorrectly saying it would remain the same, and 5% saying it makes their personal finances more stable.

Just under 10% of survey respondents said their financial literacy is low. This cohort reported feeling down about their finances and uncomfortable talking about money to family and friends. 

Some 40% of respondents cited the belief that feelings of embarrassment can be a key barrier to improving financial understanding.

Only 53% of people are comfortable talking to a friend or family member about money.

Protection against scams

“These results highlight that support is needed to educate people on the importance of financial literacy in order to increase financial resilience, inclusion, and protection against financial scams,” said PTSB chief sustainability and corporate affairs officer Leontia Fannin.

Some 47% felt technology has helped them to better understand fees and charges, financial products and services available, and their personal spending habits. 

This rises to an average of 57% for 18 to 24-year-olds. Those over 55 are the least likely group to have used technology to help understand their finances better.

Regarding the rise of AI, 27% of respondents said they would be comfortable getting AI-generated advice on how to better manage their money (up from 24% last year). This increases further to 42% for 25 to 34-year-olds.

“People rating themselves with high financial literacy are more confident about the benefits of AI and technology in building knowledge and generating advice. This suggests an opportunity for people to embrace digital tools to support them in their day-to-day budgeting and financial awareness,” Ms Fannin said.