In July 2023, a Eurobarometer survey on financial literacy in EU was conducted to test both the financial knowledge and financial behaviour (jointly considered as financial literacy) of EU citizens. The results revealed low levels of financial literacy across the EU with only 18% of EU citizens having a high level of financial literacy, 64% – a medium level, and the remaining 18% – a low level.
The then European Commissioner for Financial Services, Mairead McGuinness, said this was a wake-up call for Europe. She explained that we must step up the game to improve levels of financial literacy in the EU.
Another report, prepared by the Organisation for Economic Cooperation and Development (OECD) in December 2023, showed that only 34% of adults have a minimum level of financial literacy. This means that most individuals, at least in the 39 countries studied, cannot effectively manage their money, a skill that’s essential to individual and societal well-being.
In a world where financial decisions play a crucial role in shaping individual lives and national economies, the case for integrating financial literacy into the Maltese school education is compelling. Financial literacy is the knowledge and skills necessary to make informed and effective decisions about personal financial resources. From managing daily expenses to understanding investments and savings, financial literacy equips individuals to handle their finances confidently.
In the context of Malta, incorporating financial literacy education in schools could significantly benefit the country’s youth and contribute to its long-term economic stability and social well-being.
Malta, as part of the European Union, is navigating an increasingly complex financial landscape influenced by globalisation, technological advancements and evolving economic challenges. Maltese youths are growing up in a society where digital banking, online transactions, cryptocurrencies, and global economic shifts are becoming commonplace. Despite these developments, there is often a noticeable gap in financial education.
Many young people enter adulthood with little to no understanding of managing budgets, saving, investing, or understanding taxes. This lack of knowledge can lead to poor financial decisions, which, in turn, can have long-term consequences on personal and national financial health.
The benefits of including financial literacy in schools are huge. One of them is to empower students for real-world challenges by explaining how to manage a car loan, budgeting for monthly expenses or understanding the implications of credit card debt.
Another advantage is to reduce financial vulnerabilities. According to the OECD report, when it comes to financial vulnerability, 15% of those surveyed say they have been a victim of at least one type of monetary fraud or scam. Financial literacy education can help individuals avoid common financial pitfalls, such as falling prey to predatory lending practices or accumulating unmanageable debt.
For Maltese citizens, particularly in a country with a growing reliance on digital and global financial systems, this knowledge is critical. By enhancing economic stability, educated individuals are more likely to save, invest wisely and plan for the future. This, in turn, can reduce the burden on government social support systems and encourage sustainable economic growth.
In addressing potential challenges, critics may argue that the school education is already overloaded, and adding financial literacy could strain both students and educators. However, financial literacy can be seamlessly integrated into existing subjects like mathematics, business studies or personal development.
One of the issues is the implementation in the Maltese context. Beginning at the primary level, it is important to introduce basic concepts like saving, spending, and distinguishing between needs and wants. These lessons can be taught through stories, games and practical activities.
Going up the ladder to secondary school level, students can delve into more complex topics such as budgeting, understanding loans and interest rates, investment basics, and the impact of financial decisions on personal and family well-being.
Beyond secondary school, vocational training and university programmes can offer advanced financial literacy modules tailored to specific career paths, ensuring that students are prepared for the financial aspects of their chosen professions.
Financial literacy is not just about managing money; it is about empowering individuals to achieve their aspirations, secure their futures and contribute positively to society. By equipping students with these essential skills, Malta can cultivate a generation of financially responsible and economically aware citizens.
Integrating financial literacy into the Maltese school education is not merely an educational enhancement but a societal imperative. It equips young people with the knowledge and skills they need to navigate an increasingly complex financial world, promotes economic stability and aligns Malta with global best practices.
By taking this step, Malta will not only empower its youth but also strengthen its economy and society as a whole.
Noel Cassar is a visiting lecturer in the Faculty of Finance and Economics at the University of Malta.