The financial knowledge of the Germans is bad. This is an important building block for financial advancement.
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Berlin The Federal Minister of Finance and the Federal Minister of Education want to improve the financial education of Germans with a “National Financial Education Strategy”. Because only solid knowledge of financial issues enables people to “make sensible investment, credit and insurance decisions,” according to the concept by Christian Lindner and Bettina Stark-Watzinger (both FDP), which is available to the Handelsblatt. And this is the only way to create opportunities for individual advancement and the acquisition of wealth.
The need for action is great, because according to OECD studies, the financial knowledge of Germans is “still to be classified as low,” says the paper. Only around two-thirds of citizens correctly answer simple questions about interest calculations, and only a good half of adults (56 percent) understand the concept of compound interest. Only 44 percent can do both. A good one in four understands the connection between risk and the expected return on an investment.
According to an earlier Europe-wide study by the ING Bank, even half of the citizens see themselves as financially illiterate – Germany was second to last in a European comparison. There were deficits especially among younger people between 18 and 34 years of age.
However, because financial education is “a basic requirement for competent economic and social participation”, the two liberal ministers are planning a “national financial education strategy”. The industrialized countries organization OECD has been pushing for this since the financial crisis of 2008. “Nevertheless, Germany is the only G20 country that has not yet implemented such a strategy or is even just working on it,” write Lindner and Stark-Watzinger.
Specifically, they first want to set up a financial education platform that is intended to bundle existing serious offers. Campaigns, roadshows or training courses for teachers are to be added later.
But because too little is known about how much Germans actually understand about business and finance, research on this should also be expanded. This then creates a “foundation for innovative learning opportunities,” says the paper.
Opposition is skeptical
The Federal Minister of Education had already presented a “National Strategy for Economic Education” at the end of 2022 and reserved two million euros for it. In the expert panels in preparation for today’s campaign, there was talk of “economic education”, which encompasses more than just financial knowledge.
The opposition is skeptical: Although it is important to strengthen financial education, Germany has an implementation problem, said the education policy spokesman for the CDU/CSU parliamentary group, Thomas Jarzombek, to the Handelsblatt. The education summit, which the Union countries had boycotted, had shown that the Federal Minister “would not make any progress here without the responsible countries”. She would be well advised to involve them this time in the conception of a national strategy for economic education.
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Teacher training plays a key role in this – but of all things “the only federal program, the ‘Quality Campaign for Teacher Training’, is threatening to expire without replacement at the end of the year,” said Jarzombek. The minister must therefore urgently provide a replacement.
The planned financial education platform already exists today “too many federal platforms that are not used”. Lindner and Stark-Watzinger are therefore “well advised not to develop an expensive platform first and then to consider how it can reach users. “Ministers with sufficient financial knowledge should be aware of this,” Jarzombek added smugly.
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