How financially savvy are young Belgians?

Building up a savings pot, budgeting, borrowing responsibly - not every young person has mastered these skills. How can you, as a parent, help them to be more money conscious?

A significant proportion of young Belgians give themselves a low score when it comes to their financial affairs. In research by Febelfin, one quarter of 1,000 young people polled gave themselves a rating of between 0 and 5 out of 10. They indicated that they lack knowledge, especially when it comes to borrowing, insurance, pension savings and taxes. Almost half of them do not know how to manage a budget and three quarters are not aware that banks convert savings into loans.

Nearly half the young people admitted they hated dealing with financial affairs. There also appears to be a strong link between financial knowledge, engagement and money problems: those with less awareness of their financial affairs are less inclined to pay attention to money issues and have money problems more often. This creates a vicious circle.

Other studies into the financial literacy of young people confirm these findings. “The averages from all these studies hide a lot of extremes", says Ilse Cornelis, researcher at CEBUD at the Thomas More University of Applied Sciences. "On the one side there is a group that is completely on top of it. And on the other side there is still a group of young people that do not have even a basic level of financial literacy. They can’t, for example, interpret an invoice correctly or recognise the value of a simple budget.”

"Three quarters of young Belgians are not aware that banks convert savings into loans."

More than just knowledge

Financial literacy is more than calculating interest, or understanding what inflation means. Attitudes and behaviour are equally important. “You might know exactly what a bond is, but if you think that money should flow like water, then there is still a problem. So, it’s not only about what you know, but also how you regard money issues and how to deal with them, such as not loaning your bank card to friends,” Ilse Cornelis emphasises. What is striking is that girls score markedly differently to boys. “While boys do better with financial knowledge, girls excel more in terms of attitude. When it comes to money, girls think more often about the longer term than boys.”

Worrying about money

The Febelfin study also shows that 4 out of 10 young people are worried about their financial situation. The temptation to buy things and experiences in order to ‘not miss out’ is stronger than ever, whereas money is becoming less tangible. Young people are also still not talking enough about financial issues and their money worries. In addition to causing financial problems, this can result in higher levels of stress which has an impact on coursework, other family members and general health.

Vulnerable group

Most young people understand that there is no magic money tree in the garden, but that is not true of everyone. The fact that a significant group is still scoring poorly is the shared responsibility of parents and guardians, schools, the young person themselves and financial organisations, too. Reaching out and engaging this group of vulnerable young people is crucial. Youth (and adults) lacking in financial insight are at more risk of incurring significant debt, taking irresponsible financial risks and making poor decisions which can have serious, long-lasting consequences.

At the school desks

For these reasons, various initiatives have raised money-consciousness in children and young people. Organisations such as Wikifin (from the FSMA, the Authority for Financial Services and Markets) and Febelfin (the umbrella organisation of Belgian banks) as well as many banks are currently already doing work in the area of financial education.

The educational system has also followed suit. As of last year, financial literacy is included in Flanders’ attainment targets. That means that young people from the first to the sixth form of secondary school are receiving financial training. In the Walloon education system, financial education is also a part of the sustainability and citizenship competencies.

Discover how ING is contributing to financial literacy

Financial illiteracy is often a hidden phenomenon in our country. Currently in our society, where digital is the norm, some are missing the boat. Each year, in partnership with the King Baudouin Foundation, ING provides financial support for community projects that contribute to the development of the circular economy, digital inclusion and financial education. Aside from informing and advising customers, ING has launched various initiatives to teach children and young people how to handle their money well, such as The Money Talk.

A good example

Educational initiatives from the financial world are quite valuable in themselves, but it is parents who make the biggest difference. “The kinds of financial choices made by adults, depends to a large extent on what they’ve learned at home. Children are great at seeing and imitating: they observe and copy. Study after study confirms that. If you grow up in a family where the parents have no or few financial skills, then chances are good that you will remain at the same level of competence, for life.’’

"The kinds of financial choices made by adults, depends to a large extent on what they’ve learned at home."

5 golden tips from Ilse

1. Children see their parents as role models. The way you deal with money is the standard, in their eyes. Being a role model could, for example, look like going for an outing without spending money, such as spending a day playing in a provincial park and bringing a packed lunch.

2. Talk about money with your child, and about your own money (in general terms), if you are comfortable doing so. Have your child look over your shoulder while you draft a household budget. Explain what it means to buy or let a house, etc.

3. Involve your child in purchasing. Even a simple trip to the supermarket can be very educational, with tasks such as: analysing advertising brochures, making a shopping list (and keeping to it), comparing prices on the shelves, looking critically at discounts, making a secure card payment and checking the bill.

4. If you have room in your budget, giving an allowance is a good idea. Small amounts can also be useful as ‘learning money’. That way, your child will learn how to weigh options and make choices. With older children and young people, you can opt for a bank card. A few tips in tis article.

  • It is not enough to give your child some money occasionally. Giving an allowance is not the same thing as clear and proper agreements.
  • Establish what your child may and may not spend their allowance on.
  • Agree on how long your child has to make the amount last.
  • Always give the same amount of money at the same time.
  • Allow them the freedom to make errors; it is better that they make mistakes now than later, as adults (with larger amounts of money). Do not intervene immediately.
  • When the money's gone, it's gone. That is a part of the learning process.

5. More and more, we are conducting our financial affairs online. Choosing a secure password, having a critical attitude to sources of information on the internet and being alert for phishing are all a part of financial parenting, too.

How’s your financial knowledge?