Financial literacy training does not reach those who most need it

There are more tools for financial training and counselling available than ever before, but they are unable to reach the people who need that help the most.

Finns rarely make long-term financial plans. According to the Federation of Finnish Financial Services’ survey on saving and borrowing behaviour, the financial plans of every other Finn span only the next three months or an even shorter cycle. What is worrying is that nearly 20 percent never plan their finances in advance.

Without plans, they are unprepared for sudden financial needs. Many use fast cash loans to cover the money deficits, often without the means to pay back the credit. This June, in fact, the number of payment default entries reached a record high with as many as 372,800 persons ‒ 8.4% of all adult Finns ‒ having a registered payment default. Such figures are alarming and point to a low level of financial literacy, which may have severe results in the national economy. Young adult men seem to have the most difficulties. Vocationally educated men in their early twenties are statistically speaking the most likely to neglect their student loans.

The overall availability of financial literacy teaching is good. It was already recently included in Finnish schools’ curricula. Teachers have access to a variety of study materials and interactive applications, which include, for example, materials by the Junior Achievement network, the Me & My City teaching framework designed by the Economic Information Office, and the gamified Zaldo learning environment designed by the FFI.

Vocationally educated men in their early twenties are statistically speaking the most likely to neglect their student loans.

There are also several tools designed for adult users. The My Economy network connects a large number of different organisations and sources that support and help with the management of personal finances. The Guarantee Foundation offers financial and debt counselling and a calculator that makes personal budgeting easy. Many banks provide their own applications that help customers keep expenses under control.

Although help is readily available, it unfortunately does not appear to locate the people who would need it the most. It seems financial literacy is becoming one unfortunate example of the growing social divide in Finland. While the majority of Finns take good care of their finances and are within the reach of financial teaching and tools, a continually growing number live financially imprudently and lack basic money management knowledge and skills.

It is hard to find a simple solution that would improve the reach of financial literacy training. The Advisory Council on Financial Management set up by the Finnish Government has, however, prepared an action plan to improve financial skills. Teacher training and early childhood education have also been utilised to improve the state of financial literacy preventively.

Parents and schools hold primary responsibility for children’s ability to understand the importance of personal finances and money management. The best way to reach an entire age group is during comprehensive school and the secondary education that follows it. It is of utmost importance to have the teaching of financial literacy taken seriously at those stages.