Low level of financial literacy is a global concern, even though many countries have attempted to enhance financial literacy among their populations by introducing education programmes and research initiatives. The 2013’s Organisation for Economic Co-operation and Development study on financial literacy across the world found that; most people have a very basic financial capability (financial knowledge, skills, attitude), but understanding of everyday financial concepts and needed financial behaviour to act on those concepts were lacking amongst a big portion of the population in many countries.
The study calls on states to advance their population’s financial literacy at a young age, if indeed they are to make appropriate financial decisions for their personal finances. Many young adults between 18 and 35 years make use of a range of financial products, making use of high cost methods of financing such as credit cards or payday loans and have significant levels of debt and are making less use of formal financial instruments than previous generations due to the low level of financial literacy. This is concerning since young adults are supposed to start laying the financial foundations for the rest of their lives in their late twenties and early thirties.
It is unfortunate that basic financial literacy skills such as budgeting and/or saving are seldom taught to young adults. This is especially concerning since the ability to set a budget and keeping to it, is fundamental for individuals to control their incomes and expenses, to achieve their financial goals. Looking at indicators such as the ability to save, spend, and invest, young adults’ financial capability is distressingly very low. An advanced degree alone does not always influence an individual’s financial literacy; especially for young adults with few opportunities, noting that there are numerous barriers that make it difficult for them to study. Learn more !