Financial literacy is much more than knowing a few financial terms. It is the ability to combine financial knowledge, skills, attitudes and behaviour so that you can make rational decisions about your money and improve your financial situation by doing so. In practice, it involves both understanding and applying things such as budgeting, borrowing, insuring and retirement planning, in relation to specific milestones in life such as buying a house or retiring.
We are living longer and becoming increasingly responsible for building up our own pensions. A more complex financial world with inflation and digital services makes knowledge necessary. Good financial literacy protects against excessive debt, poor choices, unexpected costs and inadequate preparation for later stages of life.
The need is clear from the statistics in the Eurobarometer:
- In the EU, an average of just 26% score well on basic financial knowledge.
- In Belgium, 26% had a very low score (only one or not a single question correct).
- 38% of Belgians worry often to always about their finances.
- 64% regard an unexpected expense of 1,000 euros as a major crisis.
- 31% save less than 100 euros per month.
The basic principle is simple: first understand, then act. By identifying your income, expenses and debts, you can build an emergency fund and work towards long-term goals. Because emotions often play a role in spending, discipline and a well-thought-out plan are essential for you to continue making rational choices.
Financial worries are rarely confined to life outside work: they find their way into the workplace in the form of stress and loss of concentration.
- 21.3% of Belgian employees experience financial problems.
- 1 in 10 SMEs have noticed lower productivity due to financial stress.
- Nearly 40% of European employees are at increased risk of mental health problems due to financial insecurity.
In addition, the OECD explicitly states that financial education in the workplace can benefit employers in terms of higher productivity, greater satisfaction, increased motivation and greater employee loyalty.
For companies, this is a strategic HR topic. Employers can support employees with training courses on budgeting and pensions, and by communicating clearly about fringe benefits. When employees have a better understanding of their financial options, it increases both their self-confidence and their appreciation of their salary package.
Financial literacy is an essential building block for a financially healthier and more resilient life. For individuals, it means taking control of their future and experiencing less stress. For companies, it offers an opportunity to increase productivity and well-being by boosting employees’ financial fitness. It is a topic that is rightly attracting more attention, both in society as a whole and within organisations.
