Many people are familiar with the situation when every hryvnia you earn slips through your fingers, and you don’t even understand where the money went. You live paycheck to paycheck, debts are growing, and there are no savings for a rainy day. This is the reality for millions of people who do not know how to properly manage their finances. Financial illiteracy is a hidden ticking time bomb that can destroy your life, and the worst part is that most people don’t even know it exists.
In the modern world, money has become one of the main factors that determine the quality of our life, opportunities for development and personal freedom. And while almost everyone faces financial issues every day—from paying bills to making investment decisions—few truly understand how to manage their finances. The question arises: why do we not learn this art from an early age?
Financial literacy as a survival skill
Most people think that the ability to make money automatically means the ability to manage it. But the reality shows something completely different. Credit debts, financial pyramids, inflation, unforeseen expenses are only part of what you have to face in life. And if a person does not have basic knowledge of how the financial system works, he risks being on the verge of bankruptcy or losing all his savings. Knowing how to budget, manage debt, and invest is critical in a volatile economy. Financial literacy is not just a skill, but a tool for survival in a world where money rules many aspects of our lives.
However, the results of the study show that Ukrainians still do not know how to properly manage their finances. The assessment of citizens’ knowledge about money involves 3 main criteria:
- financial knowledge;
- attitude to finances;
- financial behavior.
Yes, for data study “Financial literacy, financial inclusion and financial well-being in Ukraine in 2021”:
- financial knowledge of Ukrainians is 4.3 points (61%);
- attitude to finance – 2.5 points (17%);
- financial behavior – 5.5 points (61%).
Compared to other countries, according to the index of financial literacy, Ukraine is on the same level as Bulgaria and Croatia, leaving behind Georgia (12.1 points), Romania (11.2 points) and even Italy (11.1 points).
The level of financial literacy differs between residents of cities (12.6 points) and villages (11.8 points).
The highest level of financial literacy has:
- Ukrainians aged 25–34 (12.7 points);
- Ukrainians aged 30–59 (12.6 points).
The lowest level of financial literacy was recorded:
- in youth aged 18-19 years (10.1 points);
- in the elderly (11.6 points).
Probably, this situation has developed precisely because financial literacy is still not taught in schools. Acquired knowledge comes in life situations when a person has to, as they say, step on his own rake. At the same time, financial experts unanimously emphasize the importance of modern children mastering the field of knowledge about money and currencies, which contributes to their further success and achieving financial independence in the future adult life.
According to the press service of the NBU, society’s demand for increasing financial literacy is high:
- 63% of Ukrainians want to learn how to better manage their finances;
- 79% of respondents would like their children to learn financial literacy at school.
Why we are not taught financial literacy
Paradoxically, financial literacy is often ignored in traditional education. Schools and universities focus on many subjects but do not teach the basics of financial planning, saving or investing. This lack of knowledge leads to young people entering adulthood with no idea how to manage their money. As a result, they quickly find themselves in a debt trap, taking out loans for housing, education, and cars, but not understanding how these debts will affect their financial stability in the future. Lack of financial education leads to an endless cycle of stress, financial instability and limited opportunities.
The importance of financial literacy in today’s world is obvious. Probably the worst thing that can happen to a person due to a lack of financial knowledge is the loss of opportunities. People who don’t know how to invest properly often keep their savings under the mattress, literally or figuratively, missing out on the potential for their assets to grow. They are afraid of risks, not understanding that even keeping money in the bank does not guarantee protection against inflation. Those who have learned to properly manage their finances have access to unlimited opportunities: from competent investment in the stock market to starting their own business. Financial literacy opens the door to freedom of action and confidence in tomorrow.
Experience of foreign countries in teaching financial literacy
In many foreign countries, financial literacy has become an integral part of school education. Governments and educational institutions are increasingly realizing the importance of teaching the younger generation basic financial skills to help them prepare for adulthood. The experience of countries such as the USA, Great Britain, Australia and Singapore demonstrates that early involvement in financial literacy issues has a positive impact on the general standard of living of citizens. And such countries as Norway, Denmark and the Netherlands have one of the highest indicators of financial literacy in the world. According to research data, on average, about 70% of the population of these states are financially literate. These countries have unique funding models for educational institutions, and their spending on education is among the highest in the world.
For example, Norway has a number of programs funded by the National Bank to create interactive educational materials for the country’s pupils and students on personal finance topics. The mission of these programs is to provide young citizens with a solid theoretical and practical foundation in spending, investments, loans, retirement and other long-term savings.
In the Netherlands, there are many educational programs in educational institutions aimed at learning financial literacy from an early age. In addition, back in 2012, the country’s government adopted a law aimed at combating consumer credit debts. The government obliged financial institutions to provide all potential borrowers with a single credit directory and interest payment calculator.
In the UK, financial education became a compulsory part of the national curriculum in 2014. Schoolchildren are taught the basics of money management, lending principles and pension schemes. The importance of this training is highlighted against the background of economic instability, as many young people have faced difficulties in entering the labor market. Teaching financial literacy helps students form a responsible approach to personal finances from a young age.
In the US, financial literacy is implemented at the school education level in many states. For example, the state of Florida requires high school students to take a financial literacy course in order to receive a diploma. This course teaches students about budgeting, credit cards, savings, and investing. Such initiatives are designed to prepare young people for real financial challenges and reduce the number of debt problems in the future.
Australia also takes financial literacy seriously. As part of the National Financial Literacy Strategy developed by the government, financial education is integrated into school curricula for students at different levels. Australian students study budgeting, savings, debt and financial planning, and learn about the risks of financial products such as loans and insurance. This allows them to understand from an early age how to manage their money and avoid financial problems in the future.
In Singapore, financial literacy is an important component of the national human resource development program. The country has the MoneySense initiative, launched in 2003, which provides citizens with tools and knowledge to manage their finances. School students are taught the basics of financial planning, investing, debt and credit risk management. This approach allows Singaporean schoolchildren not only to master financial skills, but also to become financially independent already at the stage of entering adulthood.
The experience of foreign countries shows that financial literacy is a critically important component of general education. Integrating this knowledge into school programs allows the younger generation to avoid many of the financial pitfalls that can arise in adulthood. This is not just knowledge about money, but the ability to make informed decisions that affect the well-being of each person and the stability of society as a whole.
At what age to start learning how to manage money
The MES plans to introduce the subject Financial Literacy in 2025-2026, during which children will learn about banks, ways of doing business, ways of saving and investing. But until then, the role model will remain parents. Experts advise talking to children about money as soon as they start to be interested in it. It is worth remembering that the information and ways of presenting it depend on the child’s level of development.
In preschool age (3-5 years), it is important to give the concept of what money is and why it should not be damaged. It is better to present information in the form of a “seller-buyer” game.
In the first years of schooling (ages 6-10), children learn to count and study mathematics. Parents give pocket money, so it’s time to learn how to spend it sparingly.
“6-10 years – the first practical experience. Here you can talk about “want” or “need”, and about saving funds for your dream – phone, tablet, etc., for which the child must save independently from pocket money and gift money”, – explains Tetyana Borymska, the founder of the CashFlow Kids educational center.
Pocket money has its own importance, because it is thanks to its regular receipt that the child will learn to use money responsibly.
With the beginning of studying such subjects as geography and history, children begin to understand the existence of different national currencies. Experts advise at the age of 11-13 to involve children in performing certain tasks for which they are paid money. It is important not only to teach children to earn money, but also to manage it wisely. Therefore, it is useful to involve children in managing the family budget — planning it, accounting for expenses, and creating their own — to manage the funds received.
After the age of 13, teenagers are ready to receive more serious information – how financial deposits work, where it is better to invest money so that it brings income. According to experts, if a child is taught financial literacy from an early age, then by the time he reaches adulthood, he can gain some financial independence — be able to earn money, manage it successfully, and multiply it.
Of course, the best example of how to use money for children will always be parents. That is why an adult should remember that it is possible to convey information to a child in an accessible and understandable way only if you yourself have a good command of the subject. If there is a lack of knowledge, then it is necessary either to replenish it first, or to entrust it to specialists, sending the child to courses. The first thing to understand is that financial literacy does not come by itself. It is a constant learning process. But fortunately, today there are many resources for self-development: books, courses, online lectures and consultations with specialists. The key to success is to start small. Learn to control your expenses, make a budget, save part of your income. It is important to be able not only to save, but also to invest, to understand how financial markets work and how to avoid fraudulent schemes.
Financial literacy is the basis of a successful life in today’s world. Without it, a person risks losing not only money, but also opportunities for development and securing his future. Learning to manage money is a life-changing skill for anyone who is willing to take responsibility for their finances. Possessing this skill, a person ceases to be a hostage of circumstances and begins to build his own life. Either she confidently steps towards financial freedom, or she chokes on debts and fears for tomorrow. The choice seems obvious, but most people continue to ignore learning about financial literacy. Not learning how to manage money is like building a house on sand and waiting for it to crumble. Time to wake up! Your financial future depends only on you.
