The OECD has begun worldwide testing of 15 year olds' knowledge of personal finances as part of PISA, the Programme for International Student Assessment. Aspects of financial literacy include dealing with bank accounts and credit/debit cards; planning and managing finances; understanding taxes and savings; risks and rewards; consumer rights and responsibilities in financial contracts.
The OECD has long promoted the importance of financial literacy, recommending that formal education should help students students in their understanding of financial issues as early as possible. Comparing levels of financial literacy will make it possible to see which countries perform best, and begin to identify effective national strategies and good practices.
Helping young people understand financial issues is important as younger generations today are likely to have to bear more financial risks in adulthood than their parents. For example, the decision to attend higher education can have long-term ramifications - in particular with the cost of university education rising in many countries.
Latest figures published in the UK suggest that half of all UK students are expected to leave university owing around 18,000 €. Clearly, preparation and guidance is needed for young people to successfully negotiate these pitfalls. The OECD also adds that the situation is compounded by ever-increasing complex financial products and services.
The European Youth Forum believes that, to the greatest extent possible, formal education should prepare young people for the challenges they will face in the real world.
Today, young people are expected to make long-term financial decisions as soon as they leave school. It is therefore crucial that they acquire a basic-know of money matters during their time in formal education. Without such knowledge, they are at the mercy of serious hardship that could follow them for years. Involving youth organisations in decision-making processes, or students in co-deciding budgets, can also go a long way to bolster the financial understanding of young people.
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