Money matters: Your guide to financial literacy

This article is brought to you thanks to the collaboration of The European Sting with the World Economic Forum.

Author: Meagan Andrews, Lead, Capital Markets Initiatives, World Economic Forum, Haleh Nazeri, Lead, Longevity Economy, World Economic Forum

• April 2024 was National Financial Literacy month in the US, but adult financial literacy rates in the country have hovered around the 50% mark for the past eight years.
• This round-up of articles looks at the challenges and solutions of improving financial literacy rates around the world.
• The World Economic Forum’s Financial Literacy Initiative aims to increase access to financial education and investing practices.

The world of finance can be a complex place, but it’s important to develop a basic understanding of the influential role money plays in our work, social life, health, education and everything in between.

From the influence of technology in driving financial inclusion to efforts to close the gender wealth gap, we go behind the scenes to keep you in the loop.

Here are the must-read financial literacy articles and videos from April – National Financial Literacy month in the US – on Agenda.

Operation HOPE, tech and financial education

Technology is providing a gateway for historically excluded people to manage their own financial future.

With inclusion in financial services at an all-time high, technology can facilitate widespread education, accessibility and affordability that were previously reserved for a wealthy few, opening doors and breaking down barriers worldwide.

Read more from the chairman and CEO of Operation HOPE, the US’s largest financial literacy organization: Inclusion in US financial services is at an all-time high – and tech can take us further

Longevity and financial literacy

Boosting women’s financial literacy helps increase their financial freedom and security in retirement.

A policy push to boost access to financial education, alongside industry investment in services and economic opportunities specifically for women, could help relieve deep systemic inequalities such as the gender wealth gap.

Read more: How boosting women’s financial literacy could help you live a long, fulfilling life

Financial literacy gap

Worldwide, 35% of men are financially literate compared with 30% of women. It may not sound like much of a difference, but this gap is significant globally, exists in both developed and developing economies and doesn’t look like closing any time soon.

There are some solutions that can help. Watch the video below for three ways to improve financial literacy among women.

Action on financial literacy

Americans generally perform poorly on understanding key financial concepts; this deficiency in financial knowledge extends globally, affecting economic and personal outcomes.

The consequences of low financial knowledge are costly and sweeping, yet the TIAA Institute-GFLEC Personal Finance Index (P-Fin Index), released on 17 April 2024, gives Americans a failing grade when it comes to understanding the concepts that underpin decisions about saving for retirement, managing debt or insuring against risks.

Read more: It’s financial literacy month: From schools to the workplace, let’s take action

Discover

How is the World Economic Forum improving the global financial system?

The financial services industry is facing several future risks, including vulnerabilities to cyberattacks due to artificial intelligence and new financial products creating debt.

The World Economic Forum’s Centre for Financial and Monetary Systems works with the public and private sectors to design a more sustainable, resilient, trusted and accessible financial system worldwide.

Learn more about our impact:

• Net zero future: Our Financing the Transition to a Net Zero Future initiative is accelerating capital mobilization in support of breakthrough decarbonization technologies to help transition the global economy to net zero emissions.
• Green Building Principles: Our action plan for net zero carbon buildings offers a roadmap to help companies deliver net zero carbon buildings and meet key climate commitments.
• Financing biodiversity: We are convening leading financial institutions to advance the understanding of risks related to biodiversity loss and the opportunities to adopt mitigation strategies through our Biodiversity Finance initiative.

Want to know more about our centre’s impact or get involved? Contact us.

Misunderstanding risk and why it matters

Around half of US adults were unable to answer three financial literacy questions posed by the recent P-Fin Index survey. Risk proved the least understood aspect of finance.

How do you think you would fare? Watch the video below to test your financial knowhow and see what can be done to improve our understanding of financial matters.

A question of finance

US financial literacy rates have been stubbornly hovering around the 50% mark for eight consecutive years, with a 2% drop in the past two years, according to the latest P-Fin Index.

Around half of US adults are financially illiterate, an annual survey shows. Image: WEF

In the European Union, a quarter of respondents scored low for knowledge in the 2023 Eurobarometer survey on financial literacy, with 18% at a low level of financial literacy.