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Promote better financial literacy, says association

"The statistics show that young people are still unable to make sound financial decisions."

Carol Chen, secretary general of the Financial Literacy and Education Association

The fallout from the cash-card loan problem last year has raised financial awareness among high school and college students, but there is still room for young adults to improve their financial literacy, especially when it comes to taxation and insurance, a survey said yesterday.

Conducted by the Financial Literacy and Education Association (財金智慧推廣協會), the survey concluded that Taiwanese students scored an average 56 points on the Jump$tart Coalition for Personal Financial Literacy's measurement and questionnaire sample.

Jump$tart, convened in 1995, is a US coalition of organizations dedicated to improving financial literacy from kindergarten through college-age youths while striving to prepare them for life-long successful financial decision-making.

The survey showed that more than 70 percent of the 3,000 respondents were aware that they had to pay higher interest rates and transaction fees if they failed to repay their unsecured credit card or cash card loans.

But a higher-than-expected 34 percent of respondents rated low in answering how they would deal with problem loans, such as repaying loans by taking out more loans at a time when "lending rates are higher than saving rates."

"The statistics show that young people are still unable to make sound financial decisions," the association's secretary-general Carol Chen (陳琬惠) said.

Financial Supervisory Commission member Gary Tseng (曾國烈) also expressed regret that youngsters had to learn the hard way when the consumer loan crisis broke out.

Youngsters should start honing their financial skills and knowledge at a young age to avoid landing in financial difficulty, he said.

Former minister of finance Lin Chuan (林全), who is also the association's chairman, echoed Tseng's sentiment, saying: "the default on credit-card and cash-card loans exemplified creditors' failure in financial management as well as a lack of financial literacy."

The cultivation of financial knowledge goes beyond the pursuit of wealth through financial skills and lies in a better understanding of wealth as a means to improve the quality of life, Lin said.

The survey also found that young people knew little about taxation and insurance products. Nearly 25 percent of high school respondents believed time deposits were less liquid investments, but more than 50 percent of respondents preferred to park their future earnings in time deposits.
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