A new report says teens in more prosperous countries are lacking in financial literacy.
While more than two-thirds of students routinely use financial products and services, levels of financial literacy are too low to make sure they can avoid financial risks, the Organization for Economic Cooperation and Development (OECD) said Thursday (June 27).
“These results, combined with the increased incidence, complexity and potential impacts of financial frauds and scams, highlight the need to better equip our young people with the knowledge and skills necessary to make safe and informed financial decisions.” OECD Secretary-General Mathias Cormann said in a news release.
“We are keen to broaden the coverage of this assessment to help inform countries’ financial education policies and strategies with robust evidence, to ensure their education systems are as effective as they can be, including to prepare young people for their financial future.”
The OECD’s PISA 2022 Volume IV financial literacy assessment studied the financial skills of 15-year-olds in 14 OECD and six partner countries and economies and found that many of them engage in basic financial activities from a young age.
For example, an average of 80% of students had purchased something online in the prior 12 months, while two-third had made a payment using a mobile phone.
“However, many still lack the skills and knowledge needed to make sound financial decisions: nearly one out of five students on average in participating OECD countries and economies, did not achieve baseline proficiency levels in financial literacy,” the release said.
The best performing students — around 11% of those studied — were capable of solving non-routine financial problems and could discuss the potential outcomes of financial decisions, showing an understanding of things like income tax.
Research by PYMNTS Intelligence has shown that many consumers want more financial expertise, and often turn to financial institutions (FIs) for guidance.
Research from PYMNTS Intelligence’s “How CUs Can Help Younger Consumers in a Distressed Economy” shows that nearly 60% of FI customers expect their financial institutions to help them improve their financial health.
The report, completed in collaboration with PSCU, now called Velera, found the need for financial advice is especially pronounced among younger consumers, with 29% of Generation Z consumers surveyed admitting they don’t know their credit scores.
“This may not be surprising, considering that 79% of Gen Z and millennials say they get their financial advice through social media,” PYMNTS wrote. “Only 11% say they use financial advisers to get the direction they need.”
