Why is the level of financial education so poor?

On one point, almost everyone agrees: the level of financial literacy is very poor. In this article, let's analyze why the level of financial literacy is so low.

Table of Contents

Recommended products

Introduction: Why is the level of financial education so poor?

Money plays a central role in our daily lives. We earn an income, pay bills, use credit, save, invest, and make consumer choices almost every day. Yet, when it comes to truly understanding how money works, many people feel lost.

How does an interest rate work?
What is the difference between saving and investing?
What does a loan really cost?
How to create a budget?
How much should I set aside for unexpected expenses?

These questions seem simple, but they are not always taught.

A low level of financial literacy is therefore not necessarily linked to a lack of intelligence or willpower. It is often the result of several factors combining: limited schooling on the subject, inappropriate financial vocabulary, a lack of discussion among peers, a society that encourages consumption, and, quite simply, a lack of financial training.

In my opinion, here are the 6 main reasons why the level of education is so low:

6 reasons why financial literacy levels are low

1. School does not adequately prepare students for future financial life

For many years, school teaches us mathematics, languages, science, and history. This knowledge is important, but it is not enough to prepare us for the financial decisions of adult life.

A young person can complete their schooling by:

knowing how to solve a complicated equation, but without knowing how to establish a monthly budget of expenses
to know irregular verbs by heart, but not to know how to read a payslip,
to know all the kings of France, but not to know how to compare two loans or determine the consequences of a bank overdraft.

Financial education initiatives do exist within school systems, but their scope and depth vary greatly between countries and institutions. And very often, it's simply not enough.

The problem is also that financial decisions quickly become concrete after studies: first salary, first home, insurance, taxes, credit, savings, retirement… Many of these topics are discovered at the time when decisions already need to be made.

2. Finance often seems too complex

This point is a consequence of the lack of school education.

In truth, many believe that finance is a field reserved for experts.

Words like "interest rate", "yield", "inflation", "diversification", "taxation", "capitalization" or "risk" can quickly give the impression that you need to have advanced knowledge to understand.

This complexity sometimes creates a vicious circle: because a person thinks they don't understand, they avoid the subject. And because they avoid it, they acquire even less experience and knowledge.

The good news is that the fundamental concepts are often much more accessible than they seem. You don't need to be an economist to understand the essential principles of managing your money.

3. We still talk about money too little in private

Money also remains a sensitive subject in many families and among friends.

We easily talk about holidays, work, leisure activities or personal projects.

On the other hand, talking specifically about one's salary, debts, rent, savings or investments can be considered indiscreet or selfish.

This lack of dialogue has an important consequence: many people have to learn personal finance on their own.

Therefore, the more you talk about money, the more comprehensive your knowledge will be.

4. We live in a society that primarily teaches us to consume

We are exposed daily to messages that encourage us to buy.

Advertisements, promotions, subscriptions, influencers, installment payments, limited-time offers: the mechanisms that facilitate consumption are numerous.

The problem is obviously not consumption itself. Spending money on things that bring value is part of life. The difficulty arises when the ability to consume grows faster than the ability to manage money.

We are told very well how to buy a product, but much less often how to determine if we can actually afford it.

The difference is fundamental.

Financial education includes learning to distinguish an immediate desire from a long-term financial goal, understanding the true cost of a purchase financed by credit, and considering the consequences of a decision before making it.

5. Financial interests are not always aligned with those of the consumer

There is also a more structural dimension.

Many economic actors make money when consumers use certain financial products: loans, insurance, investments, accounts or other services.

This doesn't mean that all these products are bad, nor that institutions systematically try to deceive their customers. But it does mean that it's particularly important to understand what you're buying and how much it costs.

A consumer who understands the interest, fees, commissions, conditions and risks of a product is generally better positioned to compare different options.

Financial education therefore also plays a role in fostering autonomy.

The more a person understands financial mechanisms, the less they depend simply on the advice of a salesperson, an advertisement, or a recommendation found on the Internet.

6. Lack of time for training

Finally, there is a much simpler reason: we are busy and we don't train ourselves enough.

Between work, family, studies, administrative obligations and daily life, dedicating several hours to understanding one's finances can seem difficult.

Many people therefore postpone the question: "I'll deal with it later."«

The problem is that financial decisions do not stop during this time.

A budget that is never analyzed, a debt that accumulates, or savings that remain inactive for several years can have significant consequences.

Financial education doesn't necessarily require dedicating a huge amount of time each week. Gradually understanding a few fundamental concepts can already significantly change the way you make decisions.

The real issue: regaining control

A lack of financial education can have very concrete consequences: excessive spending, debt, lack of precautionary savings, poor investment decisions or simply stress in the face of situations that one does not understand.

But it is important not to turn this reality into guilt.

A person who doesn't understand how a financial product works isn't necessarily irresponsible. They may simply never have had the opportunity to learn.

That is precisely why financial education is important.

It's not about getting rich quick, knowing all the financial products, or predicting the markets. It's primarily about developing enough knowledge to make informed financial decisions.

Conclusion: A skill that can be learned

Therefore, the level of financial education is not inevitable.

It can progress at school, but also at home, on Youtube, with professionals and above all through an individual desire to understand better.

You don't need to learn everything at once. Starting with your own budget can be enough. Then learn about interest, savings, inflation, loans, and gradually investments.

The goal is not to become an expert. The goal is to no longer be afraid of financial topics and to be able to ask the right questions.