Arya News - A Bank of Korea official attributed this to the general public losing interest in inflation as a result of price growth having cooled compared to 2022, when the consumer price index surged 5.1 percent, marking the steepest climb since 1998 during the Asian financial crisis.
SEOUL – South Korean adults’ understanding of what inflation is and how it affects their purchasing power fell sharply between 2022 and last year, as their overall financial literacy declined, a report showed Tuesday.
According to the report by the Bank of Korea and the Financial Supervisory Service, Korean adults scored an average of 65.7 out of 100 on a financial literacy test in 2024 — down from 66.5 in 2022. The study measured how well people grasp key financial concepts and how they apply them in daily life, based on responses collected between Sept. 2 and Nov. 1 from adults aged 18 to 79.
Among all areas tested, understanding of inflation — knowing how rising prices lead to a loss of purchasing power — showed the steepest decline, bringing down the overall financial literacy figure. In 2022, Koreans scored 78.3 points on inflation knowledge, but that figure plummeted to 56.6 last year.
A BOK official attributed this to the general public losing interest in inflation as a result of price growth having cooled compared to 2022, when the consumer price index surged 5.1 percent, marking the steepest climb since 1998 during the Asian financial crisis.
The overall financial literacy score combined three categories: financial knowledge, financial behavior and financial attitude. While knowledge and behavior both dipped slightly — by 1.9 points and 1.1 points, respectively — attitudes toward finances improved modestly, the report said.
While financial knowledge is self-explanatory, financial behavior refers to the actions and habits individuals use to manage their money, and financial attitude reflects the mindset and approach toward personal finance that affects their decisions.
Despite the recent decline, Koreans still outperformed the average adult across countries in the Organization for Economic Cooperation and Development, with the country’s overall financial literacy (65.7) exceeding the OECD average of 62.7.
Koreans’ score in financial knowledge (73.6) and financial habits (64.7) were higher than the OECD averages, but the country’s financial attitude score of 53.7 fell below the OECD average of 58. The OECD figures are based on data from 2023.
Lowest scores among Koreans in their 20s, 70s
The study also highlighted generational gaps in Koreans’ financial literacy levels.
People in their 40s had the strongest grasp of financial concepts, scoring 68.4 points on average, followed by those in their 50s and 30s. Meanwhile, adults under 30 and seniors over 70 scored the lowest, at 62.6 and 59.3 points, respectively.
The youngest group scored particularly poorly on assessing their financial situation and setting financial goals. Their scores in those categories dropped sharply from 2022 levels, suggesting a growing trend of short-term thinking about money.
One-third, or 34.6 percent, of the respondents in their 20s said no to “preferring savings over spending,” while 24.4 percent answered yes, and 40.4 percent said they agree with the sentiment “money exists for me to spend it,” while 21.4 percent disagreed. This implies more 20-somethings are leaning toward the financial attitude of spending now, rather than saving for the future.
The report also showed that individuals making at least 70 million won ($48,640) a year received a financial literacy score of 68.8 points, while those making less than 30 million won scored 59.7.