Using online compound interest tools to improve financial literacy

There is increasing acknowledgement that teachers’ knowledge for teaching mathematics is multifaceted and topic specific. Given the paucity of research on the teaching and learning of financial mathematics in general, little can be known about teachers’ knowledge for teaching compound interest. However, since financial mathematics is a component of the school curriculum in South Africa, and an important element of financial literacy more broadly, attention needs to be given to knowledge for teaching financial mathematics, and compound interest in particular. Drawing from a larger study in which the author taught a financial mathematics course to pre-service secondary mathematics teachers, a theoretical elaboration is provided of the underlying mathematics of compound interest, and connections with the world of banking. Based on findings from the study, two key student errors are identified: the over-generalisation of linear thinking in multiplicative scenarios, and the over-generalisation of reversible operations in percentage-change scenarios. Taken together, teachers’ knowledge of relevant mathematics, of the banking context and of learners’ conceptions will contribute to building a knowledge-base for teachers’ knowledge for teaching compound interest.

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Descriptive Analysis of Financial Literacy: Evidence from Public and Private University Students in Indonesia

SRIWIJAYA INTERNATIONAL JOURNAL OF DYNAMIC ECONOMICS AND BUSINESS ◽

10.29259/sijdeb.v4i1.73-86 ◽

2020 ◽

Vol 4 (1) ◽

pp. 73

Author(s):

Budi Setiawan

Keyword(s):

University Students ◽

Financial Literacy ◽

Descriptive Analysis ◽

Modern Society ◽

Private University ◽

Online Questionnaire ◽

Public And Private ◽

Risk Diversification ◽

Financial Decisions ◽

Compound Interest

Financial knowledge plays a pivotal role to survive in modern society. The study measures the financial literacy level of public and private university students in Indonesia by distributing an online questionnaire to 608 respondents. The questions of financial literacy refer to the Standard & Poor’s Rating Services, which covered three subjects, namely numeracy and compound interest, inflation, and risk diversification. For this purpose, the level of financial literacy was conducted using descriptive statistics (Eviews). The result shows that there is 12% of the respondents from public universities answered all questions correctly, which is relatively high compared to private university students are at 10%. In addition, more than half of respondents are able to answer the question about numeracy and compound interest correctly, and inflation is 39%. On the other hand, the score is only 27% for the correct answer related to risk diversification. Financial illiteracy consequences are poor financial decisions that can impact their future finance.

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O regime de juros compostos segundo a dialética ferramenta-objeto

Revista de Produção Discente em Educação Matemática. ISSN 2238-8044 ◽

10.23925/2238-8044.2020v9i2p58-69 ◽

2020 ◽

Vol 9 (2) ◽

Author(s):

DEJAIR FRANK BARROSO ◽

CILEDA DE QUEIROZ E SILVA COUTINHO ◽

MARCO AURÉLIO KISTEMANN JR

Keyword(s):

Mathematics Teacher ◽

Financial Literacy ◽

Financial Education ◽

Financial Mathematics ◽

Mathematical Concepts ◽

Mathematical Notion ◽

Doctoral Research ◽

De Se ◽

Compound Interest ◽

Didactics Of Mathematics

ResumoEste trabalho faz parte de uma pesquisa de doutorado em andamento que trata sobre o tema educação financeira e suas potencialidades para o letramento financeiro do professor de matemática na licenciatura. Pretendemos descrever brevemente as fases de organização para a construção de conceitos matemáticos segundo a dialética ferramenta-objeto introduzida por Régine Douady. Nosso objetivo é apresentar um exemplo dessa organização no campo da matemática financeira, e mais precisamente, relativo ao regime de juros compostos. Esse tipo de organização enfatiza a importância de se alternar, no ensino, os aspectos ferramenta e objeto de uma dada noção matemática. No exemplo proposto foi desenvolvida uma sequência para articular a noção de juros compostos e sua mobilização numa nova situação. Palavras-chave: Didática da Matemática; Dialética ferramenta-objeto; Juros compostos.AbstractThis work is part of an ongoing doctoral research that deals with the theme of financial education and its potential for the financial literacy of the mathematics teacher in the degree. We intend to briefly describe the phases of organization for the construction of mathematical concepts according to the tool-object dialectic introduced by Régine Douady. Our goal is to present an example of this organization in the field of financial mathematics, and more precisely, regarding the compound interest regime. This type of organization emphasizes the importance of alternating, in teaching, the tool and object aspects of a given mathematical notion. In the proposed example, a sequence was developed to articulate the notion of compound interest and its mobilization in a new situation.Keywords: Didactics of Mathematics; Dialectic tool-object; Compound interest.

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Financial Literacy and the Use of Interest-Only Mortgages

Journal of Financial Counseling and Planning ◽

10.1891/1052-3073.28.2.168 ◽

2017 ◽

Vol 28 (2) ◽

pp. 168-180 ◽

Cited By ~ 5

Author(s):

Martin C. Seay ◽

Gloria L. Preece ◽

Vincent C. Le

Keyword(s):

Financial Literacy ◽

Math Skills ◽

Fixed Rate ◽

Financial Capability ◽

Adjustable Rate ◽

Using Data ◽

Adjustable Rate Mortgage ◽

Fixed Rate Mortgage ◽

Compound Interest ◽

The Relationship

This study explored the relationship between financial literacy and the use of interest-only mortgages using data from the 2009 National Financial Capability Study (NFCS). A series of analyses were conducted to investigate characteristics associated with the use of an interest-only mortgage as a primary mortgage, as compared to fixed-rate mortgage and adjustable-rate mortgage (ARM) options. Consistent results indicate the individuals who incorrectly answered questions related to compound interest, mortgages, and diversification were more likely to be using an interest-only mortgage. Respondents with higher reported math skills were less likely to use an interest-only mortgage, whereas individuals with higher levels of financial confidence were more likely to be using one. These results reinforce concerns about a household’s ability to understand and evaluate complex mortgage products.

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How financial literacy and impatience shape retirement wealth and investment behaviors

Journal of Pension Economics and Finance ◽

10.1017/s1474747218000227 ◽

2018 ◽

Vol 19 (1) ◽

pp. 1-20 ◽

Cited By ~ 8

Author(s):

JUSTINE HASTINGS ◽

OLIVIA S. MITCHELL

Keyword(s):

Financial Literacy ◽

Strong Predictor ◽

Investment Decisions ◽

Well Being ◽

Financial Decisions ◽

Present Bias ◽

Compound Interest ◽

Retirement Wealth ◽

Simple Economic

AbstractTwo competing explanations for why consumers have trouble with financial decisions are gaining momentum. One is that people are financially illiterate since they lack understanding of simple economic concepts and cannot carry out computations such as computing compound interest, which could cause them to make suboptimal financial decisions. A second is that impatience or present-bias might explain suboptimal financial decisions. That is, some people persistently choose immediate gratification instead of taking advantage of larger long-term payoffs. We use experimental evidence from Chile to explore how these factors appear related to poor financial decisions. Our results show that our measure of impatience is a strong predictor of wealth and investment in health. Financial literacy is also correlated with wealth though it appears to be a weaker predictor of sensitivity to framing in investment decisions. Policymakers interested in enhancing retirement well-being would do well to consider the importance of both factors.

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Survey of Hungarian High School Students’ Financial Literacy in the Last 10 Years Based on the Econventio Test

Pénzügyi Szemle = Public Finance Quarterly ◽

10.35551/pfq_2021_2_1 ◽

2021 ◽

Vol 66 (2) ◽

pp. 175-194

Author(s):

Péter Kovács ◽

Éva Kuruczleki ◽

Tamás Attila Rácz ◽

Lilla Lipták

Keyword(s):

High School ◽

High School Students ◽

Financial Literacy ◽

Adult Population ◽

Financial Knowledge ◽

School Students ◽

Self Sufficiency ◽

The University ◽

Compound Interest

The Econventio Association in cooperation with the Faculty of Economics and Business Administration of the University of Szeged has been developing the financial literacy of high school students since 2011. In our study, we summarize the main findings of surveys over the past 10 years, based on a total of 110,000 responses. Our findings show high school students to have inadequate and superficial financial knowledge. The results show that high school students have low financial literacy levels. Financial knowledge is positively related to long-term oriented thinking, the opinion formed about self-sufficiency and self-care, and the general attitude towards finances. In addition to the everincreasing role of digital financial information sources, high school students draw their financial knowledge mainly from what they see at home, which influences test scores in a negative way, while at the same time financial literacy education has a positive effect on students’ financial literacy. As age and experience increase, the level of financial knowledge increases too, especially in the topics of labour market, credits and loans and insurance, however, the problematic areas remain the same over time, both for high school students and the adult population: calculating interest, compound interest, the meaning of expressions 'at least' or ‘at most’, or comparing different financial offers.

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Financial literacy and retirement planning in chile

Journal of Pension Economics and Finance ◽

10.1017/s1474747215000049 ◽

2015 ◽

Vol 15 (2) ◽

pp. 203-223 ◽

Cited By ~ 10

Author(s):

NATALIA GARABATO MOURE

Keyword(s):

Financial Literacy ◽

Financial Education ◽

Retirement Planning ◽

Pension Plans ◽

Defined Contribution ◽

Substantial Impact ◽

The Core ◽

Retirement Policy ◽

Compound Interest ◽

The Relationship

AbstractThis paper studies the relationship between financial literacy and retirement planning in Chile, a country with mandatory defined contribution pension plans at the core of its retirement policy. Using a novel dataset, we find that very few Chileans are planning for their retirement and that the levels of financial literacy are remarkably low with only 47% of the population understand compound interest and only 18% understand the concept of inflation. We also find a positive and significant relationship between financial literacy and retirement planning suggesting that investments in financial education could have a substantial impact on the way people think about retirement and therefore on their ability to reach retirement with adequate resources.

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