“Designing effective financial education programmes”

The OECD’s Global Money Week highlights the importance of financial literacy for young people in light of increasing financial responsibility and the growing complexity of financial products. Dr. Leah Zimmerer, researcher in ZEW Mannheim’s “Pensions and Sustainable Financial Markets” Research Unit, is involved in EvaFin, a project that investigates the quality and effectiveness of financial education programmes in Germany. Leah Zimmerer explains:

“Financial literacy is of central importance for young people. They are increasingly confronted with complex financial decisions, such as planning for their own retirement independently, participating in capital markets or dealing responsibly with digital financial services such as ‘Buy Now, Pay Later’. At the same time, demographic change, digitalisation and the growing variety of financial products are increasing the demands placed on individual financial capabilities.

Empirical studies show that financial knowledge has a positive effect on financial behaviour: it increases the likelihood of long-term wealth accumulation, improves the quality of diversification decisions, promotes retirement planning and supports a more sustainable approach to debt. Nevertheless, there are significant differences in financial competence between socio-economic groups. Young people, women, people with a migration background and people with lower levels of education often are not well-versed in financial matters. This can reinforce existing inequalities. Financial socialisation in the family also plays an important role. Our research findings show, for example, that parents are more likely to talk about money with their sons than with their daughters. The lower involvement of girls in financial discussions can contribute to gender-specific differences in financial knowledge, financial confidence and later decision-making behaviour.

Although a large proportion of young people explicitly want more financial education in school, the implementation of corresponding programmes in Germany has so far been inconsistent and not systematically coordinated owing to the federal structures. There is currently little evidence as to the conditions under which financial education programmes are effective, which target groups they are particularly suitable for, and how a sustainable transfer of knowledge into actual financial behaviour can be achieved. This is where the EvaFin project comes into play: the project intends to develop a theoretically grounded and methodologically robust evaluation concept for financial education interventions in cooperation with practice partners. The aim is to create an evidence-based foundation for the systematic further development of target group-related, effective and long-term financial education measures.”