Financial literacy

Financial literacy (Finanzkompetenz) is the ability to understand financial information and make smart decisions based on it.

How does Germany fare?

• OECD ranking: only mid-table (behind Scandinavia, Canada, Australia)
• 53% of Germans can't solve a compound interest calculation
• 72% can't explain the difference between a share and a bond
• 12 million employees don't file a voluntary tax return (giving away €1,063 on average)
• Only 15% have a written financial plan

What schools DON'T teach:

• How do you read a payslip?
• How does a tax return work?
• What is an ETF savings plan?
• How do you take out insurance?
• What happens when your account is garnished?

The debate on "financial education as a school subject":

• Baden-Württemberg: has had the subject "Economics/Career and Study Orientation" since 2016
• North Rhine-Westphalia: compulsory subject "Economics-Politics" since 2020
• Federal level: no uniform rules – education is a matter for the federal states
• Demand: financial experts, consumer advice centres and the OECD call for a nationwide compulsory subject

Why financial literacy matters so much:

• People with high financial literacy have on average 3x more wealth
• They get into debt less often, invest more often and plan better for retirement
• Financial mistakes when young (overdraft, buying on instalments, no provision) have LIFELONG effects