Global Money Week: Why I Want To Promote Financial Literacy

Global Money Week is an annual event to highlight the importance of financial literacy, particularly for children and young people. Being financially literate means having enough knowledge and understanding to be able to make the right decisions. 

Global Money Week 2021 has been full of engaging discussions, events and activities to help improve the financial literacy of young people worldwide. I was delighted to join the launch event at the start of this week. At the launch, policy-makers from across the world came together to share lessons learned, both personal and political, about managing money. 

More importantly, we heard directly from young people. They told us why money is important to them, as well as the steps they are taking to look after their finances during the pandemic. 

Financial literacy is an issue that must remain top of the agenda, even as Global Money Week draws to a close. 

As Commissioner for Financial Services, I want to help build a financial system that works for the digital age, for each of life’s key milestones and for the environment – and financial literacy can help contribute, alongside our other policies.

Money that works for the digital age 

Growing up on a family farm in Ireland, I learned about the financial decisions involved in running a small business at an early age. Through handling cash and interacting with customers, I quickly developed an understanding of money and its value. 

A lot has changed since then – particularly with regard to technology. Digitalisation has accelerated during the COVID-19 crisis, not least in finance: contactless payments and e-commerce have expanded in response to public health restrictions. And technology has widened access to all sorts of financial products.

So we should help young people develop the knowledge, attitude and behaviour that will enable them to navigate this new landscape and invest for their future. 

Money that works for each of life’s key milestones

Finance touches all stages of our life – whether that’s opening your first bank account, paying university fees, buying a house, saving for retirement or borrowing money. Financial literacy supports us in making these important decisions. 

Increasing financial literacy among young people needs to be a priority. Around one in four 15-year olds could not make even simple decisions on everyday spending, according to an OECD PISA study of 20 countries in 2018. Improving young people’s financial literacy will give them good financial habits to last a lifetime.

The most vulnerable groups in our society often experience financial exclusion. One third of European households are financially fragile. This means that they would not be able to face unexpected expenses in normal times, let alone during a pandemic.

So improving the financial literacy of women, older people, those from migrant backgrounds and those who are at socio-economic disadvantage should be a priority to improve their financial knowledge, help inform their financial behaviours and guide their financial choices.

Money that works for the environment 

The COVID-19 crisis also offers an opportunity: to reflect on the future we want and build a greener, more digital and resilient Europe. Climate-conscious young people are pushing us towards a greener future. Households and individual investors can play a role in moving towards a more sustainable European financial system.  

The EU’s sustainable finance agenda is all about directing financial flows towards sustainability, and will help people who want to invest in line with their environmental preferences to channel money towards green investments.

For this to happen, we need to ensure that our citizens can critically analyse investment information, including for sustainability. Strong financial literacy skills will ensure that they are safeguarding their personal financial future while investing in a greener Europe. 

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The theme of this year’s Global Money Week is, “Take care of yourself, take care of your money”. 

The time has come to introduce financial health as part of the dialogue, and ensure that our public institutions contribute to the improved financial well-being of European citizens.