Abstract
There is great concern about the population having adequate financial education (FE). This could help prevent financial fraud and contribute to creating a more stable system. In Spain, there has been an FE Plan in place since 2008, promoted by the Bank of Spain and the National Securities Market Commission. The basic action areas for the 2022-2025 period constitute the fourth phase of the national plan. In this stage, special emphasis is placed on training university students. This research is focused on this segment of the population, who will form the qualified professionals of the future. The authors analyse the perceptions of first-year students taking different degrees at the University of Extremadura during the 2021-22 academic year about aspects such as income, expenses, budgets, financial security, investment, and financial digitisation. The results are relevant for the university community and the regional authorities responsible for education. This research serves as a basis for future research focused on comparing the degree of FE between European regions.
TopIntroduction
There is great concern in many countries about the level of Financial Education (FE) among the public since this is a key factor in creating financial stability and economic progress. Good FE results in personal financial autonomy and independence. At a collective level, it fosters social inclusion and increases the financial quality of life of families. For this reason, FE is also seen as a lever for economic growth, as it helps to lessen the negative consequences of abusive practices like financial fraud and adverse economic situations such as those resulting from the last international financial crisis (PwC Foundation & Contea Foundation, 2019).
Concern about financial literacy has increased as a consequence of the financial crisis experienced over the past decade. However, it should be noted that previous studies, such as that carried out by Braunstein and Welch (2002), had already documented the lack of basic financial literacy among the U.S. population. As a result, in 2005 the Organization for Economic Cooperation and Development (OECD) established a series of recommendations and best practices to help its member states implement policies to promote financial literacy, defined by this institution as “the process by which financial consumers or investors improve their understanding of financial products, concepts and risks and, through information, education and/or objective advice, develop the skills and confidence to become more aware of financial risks and opportunities, make informed decisions, know where to turn for help and take any effective action to improve their financial well-being” (OECD, 2005, p. 21).
The OECD's work was reinforced by the creation of the International Network of FE (INFE) in 2008. Its initial objectives included the development of research and comparative analyses between countries, the sharing of experiences, the design of educational policies, etc. Currently, its working groups are focused on the following key areas of action: i) further standard setting, implementation, and evaluation; ii) analysis of the impact of digitalisation on FE; ii) the impact of the ageing population and the financial needs of the elderly (Atkinson & Messy, 2013; de Clercq, 2019).
Additionally, in 2008, an FE Plan was launched in Spain, led by the Bank of Spain and the National Securities Market Commission (CNMV in Spanish) under the slogan “Finance for All”. This Plan is currently in its fourth phase, which covers the period from 2022 to 2025, and the Ministry of Economic Affairs and Digital Transformation has recently joined as an active promoter.
Although it is a public initiative, numerous financial institutions have also been involved as collaborating entities. For example, among others, we can mention Banco Santander, which supports and gives financial backing for the project “Finances for Mortals” run since 2012 by the Foundation of the University of Cantabria for the Study and Research of the Financial Sector. This project is aimed at increasing financial literacy among young people, in rural environments, as well as among social entrepreneurs and the most vulnerable groups. The ultimate goal is for all these people to be able to understand basic financial concepts and, therefore, properly manage their daily finances and make sound financial decisions.
Similarly, some initiatives have emerged from the strictly private sector, even prior to the implementation of the national coordinated strategy. This is the case for the Edufinet project, which was launched at the end of 2007. Its initial objective was the preparation of an educational guide to raise awareness about the most relevant aspects of the financial system, as well as its fundamental products and services (Domínguez, 2013).
Key Terms in this Chapter
Income: Profit received from the sale of a good or service, usually in the form of a monetary payment.
Financial Digitalisation: A consequence of technological development in finance, which implies that financial institutions are using a virtual format for the supply of their services and products instead of a face-to-face one.
Budget: The amount of money needed to meet a certain number of expenses necessary to undertake a project.
Financial Education: Set of skills and knowledge that enable a person to understand how money works; how it is earned, managed, and invested; and how financial decisions should be made appropriately.
Savings: A portion of a person’s income that, instead of being used for immediate consumption, is used to create future provisions for investment activities or to cover unforeseen future expenses.
Expenditure: Consumption of a good or service in exchange for a consideration, usually in the form of a monetary payment.
Investment: Activity that consists of devoting resources with the aim of obtaining a benefit of any kind.
Quality of Life: Set of circumstances that guarantee a person's well-being.