One year of the corona crisis: more than half of young people experience financial problems

A study conducted among 2000 Belgians in collaboration with research bureau Indiville shows that the level of financial knowledge among all our compatriots can be raised. There is still ample room for improvement, especially among young people.

Striking: our self-evaluation, with 6.7 out of 10, is slightly higher than the actual average. Especially young people (between 16 and 30 years old) tend to overestimate themselves, which can be a problem if one becomes too confident or overconfident. In addition, the study reveals an important difference between men and women: women score less strongly in the field of financial knowledge. The difference starts at an early age (16 to 19 year olds) and is never completely made up. While girls are barely inferior to boys in terms of reading skills, scientific knowledge and numeracy (from the latest PISA figures), men appear to be better financially literate than women.

Obtaining a diploma appears to have a major positive impact on our level of financial knowledge. Those with a Master's degree score an average of 7.6 out of 10, while someone with a higher secondary education diploma only scores 5.8. This shows how important it is to integrate financial skills early into the curriculum. We improve our financial skills the most when we are between 16 and 30 years old and between 31 and 49 years old. After that, the growth in knowledge levels off.

Finally, involvement with money matters also has a positive influence on financial knowledge: those who are well informed about their financial affairs prefer to deal with money matters and have money problems less often. Today, 44% of young people are involved in their finances, compared to only 33% before the outbreak of the corona crisis. The corona crisis has therefore ensured that young people today are more aware of their money matters.

The following figure shows that the impact of the corona crisis should not be underestimated: no less than 61% of young people today say they are experiencing financial difficulties as a result of the crisis. 21%, or 1 young person in 5, even have serious financial problems. In comparison: a year ago, 45% of young people said they were in financial difficulties, of which 13% were in serious trouble. A year of the corona crisis has therefore resulted in many more young people experiencing financial problems.

This difficult financial situation means that 34% of young people are regularly afraid that their bank card will be refused in the shop. What is striking is that the group that is very afraid (14%) has increased compared to last year (11%). Savings behavior is also suffering from the financial difficulties. For example, 57% of young people today say that they are unable or insufficient to save.

This also causes many young people to worry about their financial situation. About half of young people today say that they lose sleep over their financial situation. Compared to last year, this is an increase of no less than 10%.

There appears to be a strong correlation between financial knowledge, involvement and money problems: those who are less well informed about their financial affairs are less likely to deal with money issues and more often have money problems. In this way a vicious circle is created.

Increasing financial knowledge among young people is therefore crucial. Both good financial knowledge and a high degree of involvement lead to fewer money worries and financial problems. Financial knowledge therefore appears to be the key to being better able to withstand financial setbacks, today and later.

The corona crisis has turned the world of young people upside down. Their future prospects have changed in several areas: they receive less pocket money from their parents, student jobs are canceled and their first steps on the labor market are also made more difficult by the corona crisis. Today more than ever it is important to motivate young people and to make them aware of the importance of a sound basic knowledge of finance. Today we lay the foundation for their financial self-sufficiency in later life.

Although parents are the first point of contact, they do not often and especially do not like to talk about money with their children. Saying how much you earn, how much you spend and how much is in your savings account remains a sensitive topic. However, an open and honest conversation about money is the basis of a good financial education.

Not only the parents, but also the school can play a role in imparting financial knowledge and alleviating money worries. On the one hand, school is the ideal environment for providing young people with reliable information about money. On the other hand, education can remove some of the inequality. By incorporating financial education into the training process, young people start building up financial knowledge at the same time.

Providing financial knowledge is the social responsibility of various players. By working together and developing joint initiatives – such as the Wikifin and Febelfin money quiz – we can ensure that young people become more financially skilled and stronger.