Young people’s financial capability – definitions, actors, materials

In our latest report we present the development of financial markets, the increasingly media and technology-centred lifestyle of young people, and the emphasis on one’s own responsibility in financial decision-making are challenges for young people who are going through the transition to adulthood and independence. Young people are often unable to make reasonable financial decisions, and this derives from attitudes, ignorance and inexperience, among other things.

This research paper is concerned with The actors, channels, and methods in promoting young people’s financial capability (TOKATA) -project. The target group for the project is young people between the ages of 15 and 20. The first sub-project reviews the terminology used in the context of financial capability, outlines the actors related to financial activities and skills of young people in Finland, and assesses the materials used in terms of developing financial skills targeted at young people.

In Finland, several actors participate in the promotion of young people’s financial skills, for instance, by producing material and providing training. Consumer education given at school has a significant role in the development of young people’s financial skills. The basic matters related to running a private household are taught in various subjects. In addition to the authorities, parties involved in the development of financial skills include public sector operators, voluntary sector organisations and foundations, as well as business organisations and enterprises. Even though there is some cooperation between the various actors, Finland lacks an overall plan for the promotion of young people’s financial capability.

The empirical part of the study analyses textbooks on social studies at various levels of education, finance-related online materials for young people, and finance- themed games. The materials were classified into four sectors of financial competence: management of daily finances, financial planning, the variety of financial products, and the following of economic affairs. In textbooks in particular, the individual themes are handled in a fragmented and, in some cases, limited manner. The key themes in textbooks and online materials include daily practices in terms of managing personal finances, the presentation of different types of credit, and the consequences of non-payment of bills. The independent planning of finances and risk management appear in the materials on a very limited scale. Investment is addressed mainly in upper secondary school textbooks.

Online materials complement the textbooks, but their accessibility can be problematic. They should be developed, with the objective of taking the opportunities provided by the Internet increasingly into account. At the moment, online materials are mostly brochures accessible via the Internet, but which lack any interactive elements. The everyday practices young people use in their lives, such as electronic agreements, purchases and payments made via mobile phones or over the Internet, and the seeking of credit from sources other than high street banks, are not sufficiently represented in these materials either.

Closer cooperation and the clear division of responsibilities between the actors participating in the promotion of young people’s financial skills would facilitate the versatile development of relevant materials and eliminate overlapping of the information offered. In term of the provision of information, the connection between financial affairs and young people’s lives in practice should be developed in an illustrative manner. Various actors should also consider by which means and at what stage young people’s financial knowledge and skills should be promoted so that they could get an overall picture of what kind of skills it requires to be a successful financial actor in today’s society.

PUBLICATION
National Consumer Research Centre, publications 3/2011
Young people’s financial capability – definitions, actors, materials (in Finnish, pdf)
Liisa Peura-Kapanen, Anna-Riitta Lehtinen

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