According to a survey, 81% of Spaniards do not know how to correctly answer three basic questions about inflation, compound interest and investment risk. This is a consequence of a lack of financial education

We can invest in cryptocurrencies, pay with Bizum and use our mobile phones to look at our savings, but if there is one pending subject that we struggle with year after year, it is financial education, an issue that is less complex and more essential than most of the population assumes.

Financial education is the combination of financial awareness, knowledge, skills, attitudes and behaviours needed to make sound day-to-day decisions and ultimately achieve individual well-being. Neglecting this issue has serious consequences for everyone.

Shortcomings in financial education can lead us to make erroneous decisions about our personal finances, with the consequent risk of capital losses, indebtedness and a shortage of savings, among other collateral damage, cautions CECA, the association of savings banks and banks created by such banks, comprising CaixaBank, Kutxabank and Cajasur Banco, Abanca, Unicaja Banco, Ibercaja Banco, Caixa Ontinyent, Colonya Pollença and Cecabank.

As pointed out by the experts, our individual financial behaviour influences the well-being of society as a whole by fostering the stability of the financial system. But the outlook, at least in Spain, is not very encouraging.

Less knowledge than other EU countries

Several studies continue to highlight how little we know about finance. For example, more than one third of the Spanish population between the ages of 18 and 64 admits not having "the necessary knowledge to make the most appropriate financial decisions", according to the Funcas 2023 Survey on financial culture, conducted among a sample of 1,500 people, representative of the Internet population residing in Spain. In addition, 36% of respondents, who reported such a lack of financial literacy, attributed this to the erroneous belief that finance is too complex.

The data provided by Funcas paint a similar picture to that offered by the Bank of Spain's Survey of Financial Skills for 2021, published on 14 November. The most striking figure is that 81% of Spaniards do not know how to correctly answer three basic questions about inflation, compound interest and investment risk or, in other words, only 19% answer all three questions correctly. The results of the survey, somewhat better than in 2016, still places us well below other neighbouring countries in terms of financial skills. Spain is the fourth worst country in the EU in terms of training in economics and finance.

The greatest challenges for financial education: digitalisation and young people

The absence of the necessary financial literacy multiplies the risks in an increasingly digitalised society. Digital money, cryptocurrencies and bitcoins are part of today's economy and dominate the messages conveyed through social media or by influencers with millions of followers. In Spain, more than half of those under the age of 29 invest in cryptocurrencies, according to the report by IE Foundation and Fundación Mutualidad de la Abogacía, and it is possible that the majority are unaware of the risk involved in this type of investment or use the new digital investment platforms without sufficient financial knowledge.

Financial literacy training for citizens, and especially for the younger generations, is essential for individuals to learn how to manage their own finances and resources in the best possible manner, and to make informed decisions throughout their lives, as pointed out by the OECD. Financial education is therefore the best insurance against fraud and bad investments, which is why it is particularly advisable to begin to introduce it at an early age, stresses CECA.

CECA's member entities allocated €2.23 million to improve the financial education and digital skills of society in 2022

This association advocates joining forces to immediately implement financial education in the school curriculum and to transmit the teaching of basic financial skills and competences, as well as to achieve a good educational ecosystem with financial education programmes that involve everyone. Another challenge is to convey knowledge among the entire population, young and not so young, about the new concepts and products that have emerged as a result of digitalisation.

The largest investor in financial literacy

"In a world where technology and globalisation deeply affect the experience of young people, culture emerges as an essential tool to empower and protect young people against digital indoctrination", says Alberto Aza, spokesperson for CECA. CECA's member entities allocated €2.23 million to improve the financial education and digital skills of society in 2022. With just over €15 million invested over the past five years, this sector has consolidated its position as the largest investor in financial education in Spain, launching numerous initiatives on topics such as savings and budget management, cybersecurity and investments, among others.

In addition, CECA is part of the Financial Education Plan, which aims to promote initiatives that bring financial culture closer to all groups, thus limiting the digital divide. An investment designed to improve financial skills in order to provide a better quality of life for all.