22 October 2018 NEWSLETTER GLT
Di Arianna Filippi
“Financial literacy is an essential life skill. It is also a key tool to address inequality” said Angel Gurría, OECD Secretary-General, at the 10th Anniversary of the OECD International Network of Financial Education (INFE) during the related symposium. Financial education is still regarded as a privilege, an expertise reached only through years at economics and finance majors. It is not quite so. Being financially literate means being able to take accurate decisions about several issues in everyday life, from the simple phone plan to the most important mortgage instalments.
Finance does not discriminate by gender: it affects everyone in the same way, yet the approach towards it is so different from men to women that created a gender imbalance by itself. Financial education is therefore not only a solution for the economy, leading people to understand its mechanism and avoid unnecessary risks or loss, but also for this side of gender inequality that seems to be the most neglected.
Italy is (alas) a perfect example of this discrepancy: 45% of men are financially literate, while only 30% of women shows basic financial knowledge. Age-wise, the picture does not get any better. Italy is the only country that shows a gender gap in financial literacy even among Millennials. According to PISA (Programme for International Students Assessment 2015), financial literacy decline with age in Italy, setting Millennials to have the highest financial literacy in the country at 47%. In this scenario, however, Italian boys tend to perform better than girls, despite the opposite global trend.
Financial literacy is also a common goal set by the international community, recognised by its essential value and its outreach. Not surprisingly then, the OECD (Organisation for Economic Co-operation and Development) is on the front line to guarantee a different future for financial knowledge. The OECD created the INFE, the International Network for Financial Education, in 2008 to promote the cooperation between states for suitable national strategies and initiatives for the stakeholders of financial literacy.
The symposium, events and research established by the Network has proved fundamental to discuss public and private projects of the Members, from affiliated private entities to governments. It encountered several challenges along its way, but gained successful results into making the policymakers aware and enlightened about the financial literacy conditions of their own states.
Over 300 public and private institutions from more than 110 countries have joined the Network. The OECD, through the efforts of INFE, has developed best practices and principles to reach the good financial education globally. Several guidelines have been enacted, such as the OECD/INFE Policy Guidance on Addressing Women’s and Girls’ Needs for Financial Awareness and Education, endorsed by the G20 leaders in 2013.
The INFE reports are extremely useful to assess the financial knowledge, attitude and behaviour of states, while its support to the PISA evaluation process has proven to be essential to determine the status of financial education in the selected countries, monitoring the next steps.
The future is bright for this Network, and the Global Thinking Foundation is proud to be a part of it, as the only private Italian foundation. As Affiliate Member, the Foundation expresses its commitment to the cause of financial literacy and education, offering its contribution to promote the mission with its international outreach.
The Global Thinking Foundation has participated to every symposium since its establishment, and it is devoted to future prospective collaborations with the INFE and the OECD.
The goal of the GLT Foundation has also found its strong base on research and tangible evidence, proof of its highest regard towards scientific research and statistics.
In 2017, the OECD and the G20 jointly assessed the level of financial literacy of adults in the G20 countries. The results show how much Italy still needs to be done not only in terms of education, but also in terms of national strategies, mobilisation and support for financial literacy throughout the country.
Participants: G20 countries and two guest states (Norway and the Netherlands). 101,596 adults aged 18 to 79.
Assessment Process: OECD/INFE Financial Literacy and Financial Inclusion Measurement Toolkit. It compares data to evaluate financial knowledge, behaviour, attitude and inclusion. Questions and answers (multiple choices, yes/no, agreement) for a total of 21 points (7 for knowledge, 9 for behaviour and 5 for attitude).
Italy scored far below average in almost every aspect of the assessment. Nevertheless, Italian men and women do not have a severe gap in overall score: their point difference is only 5, comparing to 11 points of the G20 average. It is clear that, while Italy does have a lower financial proficiency, at least in adults, the gender difference does not strike a severe hit on the overall score.
In an increasing digital world, it is important to use the new tools of technology to improve our way of life, including financial education. The Global Thinking Foundation understands and shares this view: in 2016, it launched FamilyMI, an online portal for financial literacy. The user fills out a questionnaire to test his or her financial knowledge, processed through a particular algorithm, to be then directed to short videos aiming to fill the gaps in his or her proficiency. Easy, digital tools, within the reach of everyone, are the future of learning and social inclusion.
The report then shows other details regarding attitude and behaviour of the G20 countries. Among the several topics, the data taken into account is the use of a budget, paying bills on time and setting long-term goals.
Italy seems to continue its trend of staying below G20 average, yet Italians manage to pay their bills on time almost as much as the next G20 country.
A budget is at the same time the simplest and the most essential tool for the household’s finance. It allows the family not only to cut unnecessary expenses, but also to set long-term goals and a saving plan. In order to freely offer this tool in the most efficient and immediate way, the Global Thinking Foundation has created an online budgeting tool: the user fills the various spaces allocated for expenses, rent and fees. The program automatically creates a suitable weekly, monthly and yearly budget, downloadable for free in excel and PDF version.