A policy brief publishe on February 2024 by Bruegel, titled “The State of Financial Knowledge in the European Union,” highlights significant gaps in financial literacy across EU member states. The study reveals that only 50% of individuals can correctly answer at least three out of five basic financial questions, indicating a substantial need for improved financial education.

Key Findings:

• Understanding of Financial Concepts: While concepts like inflation and the relationship between risk and return are better understood, only 20% of respondents correctly answered questions about the relationship between interest rates and bond prices.
• Demographic Disparities: Significant gaps exist between different demographic groups. For instance, there is an 18 percentage point difference between men and women in financial knowledge, with men outperforming women. Additionally, disparities are evident between age groups, education levels, and income brackets.
• Financial Resilience: Individuals with higher financial literacy are less financially fragile, better equipped to handle unexpected financial shocks, and more confident about their financial futures.

Policy Recommendations:

The brief emphasizes the urgent need for EU countries to implement and monitor national financial literacy strategies. These strategies should focus on:

• Early Education: Integrating financial education into school curricula to build a strong foundation from a young age.
• Targeted Programs: Addressing the specific needs of vulnerable groups, including women, the less educated, and lower-income individuals.
• Digital Skills: Enhancing digital financial literacy as financial services become increasingly digitalized.

Improving financial literacy is crucial for fostering financial inclusion and ensuring that all citizens can make informed decisions about their financial well-being.