For the very first time, in the Spring of 2023, the European Commission (EC) carried out a survey across all member states to assess their level of financial literacy. This survey complements other national surveys and fills an important gap because it provides a consistent metric that allows comparisons among the European Union (EU) countries. The motivation behind the EC’s survey stems from the need to advance the state of financial literacy to safeguard financial stability and promote important projects, such as the creation of a Capital Markets Union. In this paper, we analyze these new data and confirm findings in the literature about the importance of being financially knowledgeable to achieve good financial outcomes. Unfortunately, the survey also confirms that barely one in two individuals, on average in the EU, is financially literate.

This paper surveys what we have learned on financial literacy and its relation to financial behavior from data collected in the Dutch Central Bank (DNB) Household Survey, a project done in collaboration with academics. A pioneering survey fielded in 2005 included an extensive set of financial literacy questions and questions that can serve as instruments for financial literacy in regression analyses to assess the causal effect of financial literacy on behavior. We describe how this survey spurred a series of research papers demonstrating the crucial role of financial literacy in stock market participation, retirement planning, and wealth accumulation. This inspired various follow-up studies and experiments based on new data collections in the DNB Household Survey. Researchers worldwide have used these data for innovative studies, and other surveys have included similar questions. This case study exemplifies the essential role of data in empirical research, showing how innovative data collections can inspire new research initiatives and significantly contribute to our understanding of household financial decision-making.

We provide a brief history of administering financial literacy questions in probability-based Internet panels. After financial literacy questions were asked in the Centerpanel in the Netherlands and the RAND American Life Panel, the Understanding America Study (UAS) has been administering 14 financial literacy questions in its biannual core surveys since 2014. Due to its longitudinal nature and the vast amount of available information on its panel members, the UAS provides unique opportunities for analyzing patterns of financial literacy over time and its associations with financial outcomes, cognition, health, personality, and economic preferences, among others. The UAS survey-based dataset is further enriched with administrative records from consenting respondents. Importantly, researchers can incorporate additional questions and modules to gather specific data, which can then be linked to both existing and forthcoming information on panel members. In this paper, we describe the UAS financial literacy measures and offer descriptive analyses, highlighting the patterns of financial knowledge over time and by individuals’ background characteristics. We also show how financial outcomes, such as financial wealth and retirement preparedness, relate to financial literacy scores.

We test the effectiveness of an online interactive pension dashboard in improving pension funds participants' ability to make adequate pension decisions in terms of pension preparation, knowledge, self-efficacy, expectations, and intention-to-act. In a randomized survey experiment, treated participants of two pension funds receive an encouragement to visit an online pension dashboard. Treated individuals have more pension knowledge and an increased self-efficacy in the pension domain, especially so for females. The dashboard does not have a significant impact on the pension preparation or the errors in forecasts of pension income nor does it impact the willingness to act if there is a need to do so.

We measure crypto and financial literacy using microdata from the Bank of Canada’s Bitcoin Omnibus Survey. Our crypto literacy measure is based on three questions covering basic aspects of Bitcoin. The financial literacy measure we use is based on three questions covering basic aspects of conventional finance (the “Big Three”). We find that a significant share of Canadian Bitcoin owners have low crypto knowledge and low financial literacy. We also find gender differences in crypto literacy among Bitcoin owners, with female owners scoring lower in Bitcoin knowledge than male owners. We do not, however, find significant gender differences in financial literacy amongst Bitcoin owners. In contrast, non-owners show gender differences in both crypto and financial literacy.

Financial literacy is today globally recognized as an essential life skill. However, many young adults have large debts due to consumption loans, and the situation in Sweden is escalating. Previous research has indicated a low financial literacy, and that the prevalence of mental illness is high within the group. In this report, we studied financial literacy, personal financial situation, and self-reported mental illness in a Swedish sample, comprising 2 057 respondents between 18 and 29 years. Our main findings indicate that financial literacy is lower than has previously been described, especially concerning knowledge about inflation. One in four reported they had consumption loans, one in three had loans to relatives, almost half of the respondents had perceived financial difficulties during the past year, and one out of ten had turned to the budget and debt advisor to receive help. Women showed lower financial literacy compared to men, indicating an important gender aspect. Our findings per se are sounding the alarm for policymakers to immediately pay attention in order to prevent the risk of becoming overindebted early in life. The present study highlights the urgent need to further study the complex relationship between financial literacy, personal financial situation, and mental illness among young adults.

This paper examines financial literacy in Canada using a dataset from early 2023 that measures the knowledge of middle-aged Canadians regarding their retirement income system. We first document important financial literacy differences across gender, age, education, and labor market status. Using detailed questions on the four main aspects of the retirement income system, we then show a strong correlation between financial literacy and the knowledge of the retirement system in Canada. Finally, we provide evidence that general financial literacy and knowledge of the retirement system matter for retirement preparation, by showing that Canadians with higher financial literacy scores and better knowledge of the retirement system are more likely to have a plan for retirement.

Access to financial education courses makes a difference in high school students’ future financial lives. However, little data have been available to assess the access students have to these classes and what types of financial education are offered throughout the United States. We describe a novel dataset of over 19,000 hand-coded high school personal finance courses for over 7,400 high schools across the United States. These data cover the academic years from 2019–2020 to 2022–2023. The most common type of financial education offered is a semester-long course focused entirely on financial education, rather than, for example, a course on another topic that builds in a section on financial education. Schools that are in rural areas, schools with a higher percentage of Black students and schools that are geographically isolated from peers with high financial education requirements are less likely to require financial education courses for graduation.

In this paper, we provide an analysis of financial literacy in Peru and Uruguay. We find that the knowledge of simple concepts at the basis of financial decision-making is low in both countries. Not only is financial illiteracy widespread, but it is particularly acute among women, rural populations, the less educated, low-income people, the self-employed, the not employed, younger people (in the case of Peru), and older people (in the case of Uruguay). We also find that financial literacy is linked to measures of financial wellbeing: those who are financially literate are more likely to be able to save and plan for retirement in both countries. In addition, we find a relationship between knowledge of specific concepts and key financial behaviors. Lastly, we find a relationship between financial literacy and financial resilience

We examine financial literacy in Finland and its connection with various financial outcomes using novel survey data collected in 2023. While the overall Finnish financial literacy level is about average among the OECD countries, there is significant heterogeneity within the population. Women have lower financial literacy than men. The young and the old have lower financial literacy than respondents in their prime working age, and entrepreneurs have higher financial literacy than other groups. Financial literacy is also correlated with higher educational levels. We further study the relationship between financial literacy and a number of economic outcome variables. We find financial literacy to be negatively related to coping with a major expense, facing an income shock, and with perceived over-indebtedness. However, we do not find a statistically significant relationship between financial literacy and retirement planning in Finland.

We analyze financial literacy regarding interest rates, inflation, and risk diversification in nine Eastern European countries based on survey data collected in the fall 2022. The percentage of individuals with an understanding of all three concepts is generally low but varies strongly among countries, from 13 percent in Romania to 47 percent in the Czech Republic. Financial illiteracy is particularly acute among those with primary or lower secondary education. Among the three concepts, inflation is what people know best in eight out of nine countries – a pattern which has emerged recently and is in contrast to other countries, where interest rate literacy is highest. Differences in lifetime inflation experience, in particular experience of high or hyperinflation, affect inflation literacy. Higher financial literacy is associated with a higher propensity to save and a lower propensity to be financially vulnerable in six out of nine countries.

This paper examines financial literacy in the United States, using the 2021 National Financial Capability Study data. A large volume of papers have demonstrated the importance of financial knowledge and documented the low level of financial literacy in America. Using recent data collected during an unusual time when inflation was rising and the country was in the midst of the COVID-19 pandemic, we show that the knowledge of fundamental financial concepts continues to be low in the US, especially among people who are young, less educated, female, or not employed. Our analysis also highlights people’s lack of inflation knowledge and identifies the subgroups that are particularly vulnerable. Finally, we examine how financial literacy affects financial well-being and behaviors. Responses to the Big Three financial literacy questions are linked to important financial behaviors and outcomes, including planning for retirement, financial resilience, and not carrying too much debt.

This paper examines financial literacy in Japan using a recent dataset from 2022 and finds that financial literacy levels are low. Only 36% of the respondents could correctly answer the Big Three financial literacy questions, three well-known questions assessing the understanding of interest, inflation, and risk diversification. Also, significant demographic variation exists in the Japanese population: the young, women, and the less educated are those who struggle the most with these fundamental financial concepts. Additionally, we find that Japanese who know the basics about environmental, social, and corporate governance (ESG)-related principles are also those who show better financial literacy levels than those who do not know about ESG. Lastly, our results confirm that financial literacy matters: it is strongly and positively correlated with active investment behavior, which may affect wealth accumulation and financial wellbeing.

Pension systems increasingly require active involvement from their participants for retirement planning. This leads to the need for a proper level of financial literacy to foster decision-making. Based on the Chilean Social Protection Survey and the Regional Development Index data, specific characteristics related to the region of residence, such as the quality of life, access to job opportunities, and available connectivity tools, are seen to have a positive impact on pension knowledge. Hence, these regional level results provide inputs to policymakers for developing appropriate policies regarding pension knowledge.

In this paper, we examine financial literacy in Singapore. Using data from the SKBI-GFLEC Sustainable Investment Survey, we find that approximately 40% of Singaporeans are financially literate. We also find that financial literacy is low among specific groups such as women, the less educated, and the unemployed. Moreover, we examine financial literacy across Environmental, Social, and Governance (ESG) literacy. We find that those with higher ESG knowledge are also more financially literate, showing that knowledge of these two different financial concepts is positively correlated. Finally, our results show that financial literacy can be linked to investment behavior which may affect financial well-being in the long run.

In this paper, we examine financial literacy and financial resilience in Italy. We show that financial literacy is particularly low among the young, women, and the less educated. We also highlight regional differences in financial knowledge, with individuals in Southern Italy performing worse. We find that the lack of financial literacy increases the probability of being unable to face financial shocks and leads to an overaccumulation of debt. Hence, our results support the hypothesis that financial literacy can be considered an enabling factor for financial resilience.

At the onset of the Covid-19 crisis, and with one of the largest and best-funded defined contribution programs in Latin America, Chile held over USD $200 bn in assets (or more than 80% of GDP). Reacting to populist pressures during the pandemic, however, the Congress gave non-retired participants three separate opportunities to tap into their retirement accounts, leaving some 4.2 million participants with zero retirement savings and draining around $50 bn from the system. This paper explores several hypotheses regarding why people withdrew their pension money early, and it also presents evidence regarding the likely impact of this short-term policy on long-term retirement wellbeing. We conclude with lessons for global policymakers seeking to protect pension assets critical for retirement security.

Financial literacy is a dangerous illusion. The article builds on existing critiques, notably the work of Lauren Willis, to show that the discourse of financial literacy education raises fundamental epistemological issues about the nature of financial markets and financial behaviour. The difficulties of achieving financial literacy are ill conceived simply as the outcomes of market imperfections. Instead, structural inequalities, financial reform, and the nature of financial assets preclude consumers from achieving adequate levels of financial competence and the claim that they can do so diverts attention from the causes of unequal economic outcomes.

In this editorial, we provided an overview of the papers in the inaugural issue of the Journal of Financial Literacy and Wellbeing. They cover topics that are at the center of academic research, from the effects of financial education in school and the workplace to the importance of financial literacy for the macro-economy. They also cover financial inclusion and how financial literacy can promote the use of basic financial instruments, such as bank accounts. Moreover, they cover financial decision making in the context of complex instruments, such as mortgages, reverse mortgages, and crypto assets. The papers all share similar findings: financial literacy is low and often inadequate for making the types of financial decisions that are required today. Moreover, financial literacy is particularly low among already vulnerable groups. Importantly, financial literacy matters: it helps people make savvy financial decisions, including being less influenced by framing, better understand information that is provided to them, better understand the workings of insurance, and being more comfortable using basic financial instruments. In a nutshell, financial literacy improves financial wellbeing.

The family home is the most important asset on household balance sheets, aside from human capital. Choosing a suitable mortgage is therefore critical to financial well-being but households often make costly mistakes. We collect data in an online survey to test borrowers’ comfort with, and understanding of, mortgage debt. We analyze the impact of financial literacy, mortgage broker advice and whether the loan is framed as a lump sum debt or an equivalent stream of repayments. We conjecture that participants’ comfort with loans and their ability to match lump sum debt to equivalent repayment streams will help them to choose a suitable mortgage. Results show that participants with high financial literacy are less comfortable with mortgage debt in general and also less sensitive to framing than those with low financial literacy. Literate participants are better able to match repayment streams with the equivalent lump sums. Endogeneity-controlled regression analysis shows that consulting brokers leads to higher comfort with debt and lower sensitivity to framing. Survey responses also indicate more uncertainty about future house prices among borrowers who intend to consult brokers than among those who do not.