What knowledge do Spaniards have about personal finances? Do we know how to manage our savings? Do citizens know how inflation works or what compound interest is? These are some of the questions that the latest Financial Competencies Survey (ECF) published by the Bank of Spain has attempted to answer.

In general, the conclusion is clear: the vast majority of Spaniards lack basic skills and there is still a long way to go but we are improving. This has been reflected in the aforementioned study, which concludes that only 19% know basic concepts such as inflation, compound interest rate or risk diversification.

“We have improved but there is room for improvement at much higher levels,” said Ángel Gavilán, General Director of Economy and Statistics of the Bank of Spain, who specified that in this aspect “we are below the countries around us.” .

To determine the degree of knowledge of Spaniards about basic finances, the methodology used by the BE has been to ask the same three questions to respondents about inflation, compound interest rate or risk diversification.

The percentage of correct answers was highest for the question about inflation (65%), followed by diversification (52%) and compound interest (41%). The average percentage of correct answers is 53%, which is two points more than in 2016, the year in which this survey was carried out for the last time.

Gavilán has stated about this data that from the banking regulator “we try to make rigorous documents” but that “we have to make a significant effort when communicating it”, as they are doing on the agency's blog through “a more accessible language.”. However, he has opted to “reinforce spending on education and review the efficiency of that spending.”

The credit card, the most purchased product

The document, prepared with information obtained from nearly 8,000 surveys carried out between the end of 2021 and mid-2022 among citizens between 18 and 79 years old, has also gauged the knowledge and ownership of savings products by Spaniards.

In this sense, the study determines that the best known are pension plans, investment funds, stocks and cryptocurrencies, since between 84% and 88% of the population has heard of them.. On the other hand, less known are fixed income (72%) and savings accounts (60%).

This situation, recognized by the BE, has surely changed because since July 2022 interest rates have risen again after eleven years at zero or negative, which has sparked interest among the population in fixed income (deposits , State Bonds, Treasury Bills…) and savings accounts (those that remunerate your balance while the money is always available).

In terms of possession, the most purchased product was the credit card, the use of which increased from 2016 to 2021 by up to seven points (from 56 to 63%), while the savings vehicles that were contracted most frequently were savings accounts. savings, investment funds and stocks, all with a percentage of 7%. Cryptocurrencies deserve special mention, a booming financial product that 5% of the population has already acquired, especially young people between 18 and 35 years old (13%).

“The ownership of savings vehicles grows with the educational level and household income – 27% for citizens with less than a high school education and 58% for those with university education or similar -, it is higher for those who work and for those men”, explained the senior official of the Bank of Spain, who has specified that the largest holding in this type of products is in the age group between 55 and 64 years.

How do Spaniards save?

The report also includes what the behavior of savers was like in 2021, in the midst of the coronavirus pandemic, with restrictions such as perimeter confinement, the limitation of meetings in bars and restaurants or the curfew.

In this context, up to 70% of the population managed to save in those twelve months, nine points more than in 2016. The data indicates that the main way of saving consisted for 68% of Spaniards in accumulating money in their checking accounts. followed by cash savings (40%), options with which your money does not offer any profitability.

Finally, the survey addresses the vulnerability of households. It points out that 25% of the population confessed that in the last year their expenses had exceeded their income and that in more than half of these households (55%) the difference was financed with savings while 35% did so through the informal credit, which involves borrowing money from family and friends.