Main Purposes and Challenges in the Financial Education of Financial Consumers in the World

By Fraczek, Bozena | Journal of Economics & Management, January 1, 2014 | Go to article overview

Main Purposes and Challenges in the Financial Education of Financial Consumers in the World


Fraczek, Bozena, Journal of Economics & Management


Introduction and literature review

The starting point in this paper is the fact that level of financial literacy is unsatisfactory in most countries. This has been demonstrated in numerous studies conducted in many countries all over the world, e.g. in Australia, in Austria, in Chile, in Germany, in Ireland, in Italy, in Japan, in Netherlands, in New Zealand, in Poland, in Russia, in Sweden, in United Kingdom, in US1. There are also results of the research that proves low level of financial literacy in many countries2.

The most important way, tool to improve the level of financial literacy is financial education. This is "the process by which financial consumers/investors improve their understanding of financial products, concepts and risks and, through information, instruction and/or objective advice, develop the skills and confidence to become more aware of financial risks and opportunities, to make informed choices, to know where to go for help, and to take other effective actions to improve their financial well-being"3. The importance of financial education has recently increased all over the world4, because of development and sophistication of financial markets as well as because of increasing transfer of risks to households which are more directly responsible for critical financial decisions for their future wellbeing. There is underlined the role of financial education for the average family and investors5as well as for economic development6 in contemporary world.

It is necessary to properly identify the objectives of financial education - to its efficiency. But it requires the recognition and specification of the factors (e.g. socio-demographic) influencing level of financial literacy. Only the specification and hierarchy of the most important objectives of financial education allow for defining the priority areas of effective education.

The establishing objectives of financial education based on previous studies as well as taking into account additional circumstances (such as the current situation and evolution in areas such as the economy, demography, financial market development, etc.) should result in the creation of a hierarchy of objectives.

The next stage of the process of financial education related to objectives is to establish a roadmap to achieve specific and predetermined objectives within a set period of time7. Effects of these activities are programmes targeted at the specific needs of various social groups. The most typical target groups are defined by age, gender and life situation8.

With respect to the mentioned insights, the objective of the paper is a presentation, characteristics and the prioritization of most important purposes of financial education all over the world. The systematization of the purposes of financial education has not been presented in the literature so far.

The analysis of academic literature and non-academic reports and other documents influences the scope of problems undertaken in further parts of this paper. First, the author of the article has attempted to make the recognition of the level of financial education in the world. Then the main purposes of financial education in many countries have been described, as well as their characteristics were made and some classifications have been presented. In this article are also presented the most important difficulties in realization of financial education purposes.

1. Methodology

The presented article is the type of review article, which aim is to synthesize and summarize the information about purposes of financial education all over the world (using the examples of many countries). The paper is based on the study of literature and it uses both academic as well as non-academic sources.

The content of academically reviewed articles shows that there is much research which focuses on determining the level of financial literacy in many countries. Basically, the main reason for the financial education is the low level of financial literacy. …

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