We can invest in cryptocurrencies, we pay with Bizum and we use our mobile phones to look at our savings, but if there is one pending subject that we drag on year after year, it is financial education, a less complex and more essential issue than what the majority of the population assumes.
Financial education is the combination of financial awareness, knowledge, skills, attitudes and behaviors necessary to make sound decisions in our daily lives and, ultimately, achieve individual well-being. Neglecting this matter has serious consequences for everyone.
Deficiencies in financial education can lead us to make erroneous decisions about our personal economy, with the consequent risk of property losses, debt and lack of savings, among other collateral damage, warn CECA, the association of savings banks and banks created by them. , made up of CaixaBank, Kutxabank and Cajasur Banco, Abanca, Unicaja Banco, Ibercaja Banco, Caixa Ontinyent, Colonya Pollença and Cecabank.
As specialists point out, our individual financial behavior influences the well-being of the entire society by promoting the stability of the financial system. But the outlook, at least in Spain, is not very encouraging.
Various studies continue to focus on how little we know about finances. For example, more than a third of the Spanish population between 18 and 64 years old admits not knowing “what is necessary to make the most appropriate financial decisions,” said the Funcas 2023 Survey on financial culture, carried out on a sample of 1,500 people, representative of the Internet population residing in Spain. Furthermore, 36% of those surveyed, who declared this lack of financial knowledge, gave the reason as the mistaken complexity that finances entail.
The Funcas data draws a panorama similar to that offered by the Financial Competencies Survey for 2021 from the Bank of Spain, published on November 14. The most notable figure is that 81% of Spaniards do not know how to answer well three basic questions about inflation, compound interest and risk in investments or, in other words, only 19% answer well to all three. questions. The survey, somewhat better than that of 2016, continues to place us in financial competencies well below other countries around us. Spain is the fourth country in the EU with the worst training in economics and finance.
The lack of necessary knowledge in finance multiplies the risks in an increasingly digitalized society. Digital money, cryptocurrencies and bitcoins are part of the current economy and dominate the messages transmitted through social networks or in the mouths of influencers with millions of followers. In Spain, more than half of those under 29 years of age invest in cryptocurrencies, according to the report by the IE Foundation and the Fundación Mutualidad de la Abogacía, and it is possible that the majority do not know the risk that these types of investments entail or use the new digital investment platforms without having sufficient financial knowledge.
Training citizens in financial skills, and especially the new generations, is essential for individuals to learn to manage their own economy and resources in the best possible way, in addition to making informed decisions throughout their lives, as as the OECD points out. Therefore, financial education is the best insurance against fraud and bad investments, which is why it is especially advisable to start disseminating it at an early age, CECA emphasizes.
This association advocates joining efforts to immediately implement financial education in the school curriculum and transmit the teaching of basic financial skills and competencies, in addition to achieving a good educational ecosystem with financial education programs that involve the involvement of everyone. Another challenge is to transmit knowledge among the entire population, young and not so young, about the new concepts and products that have emerged from digitalization.
“In a world where technology and globalization deeply condition the youth experience, culture emerges as an essential tool to empower and protect young people against digital indoctrination,” says Alberto Aza, spokesperson for CECA. In 2022, CECA entities allocated 2.23 million euros to improve financial education and digital skills in society in 2022. With just over 15 million euros invested in the last five years, this sector is consolidated as the largest investor in financial education in Spain, launching a multitude of initiatives on topics such as savings and budget management, cybersecurity and investments, among others.
In addition, CECA is part of the Financial Education Plan, whose objective is to promote initiatives that bring financial culture closer to all groups, thus limiting the digital divide. An investment designed to improve financial skills in order to provide a higher quality of life to everyone.
