Written by Melinda Cooper
While multiple statistics show that Hungarians have some of the lowest levels of foreign language literacy skills in the world, the situation seems to be very different when it comes to their knowledge of financial literacy.
The latest global financial literacy survey conducted by the OECD ranks Hungary somewhere in the middle amongst the 24 countries that took part in the survey.
But what can we conclude from this? Does this mean that Hungarians have plenty of money as a result of their high financial literacy skills?
Unfortunately, not at all.
Financial literacy does not refer to the level of financial wealth, but to the way in which money is managed.
The questionnaire used by the OECD for this survey is split into three sections: knowledge, behaviour and attitude. The first section relates to the theoretical knowledge of financial terms and processes, the behaviour section has questions about how one spends their money, and the attitude relates to the forward planning (such as pensions and investments)
Looking at these 3 individual measures gives a clearer picture of what is going-on with the Hungarian population.
While Hungarians rank exactly in the middle for financial knowledge skills, they have the second worst score (behind only Italy) for financial behaviour, but jump significantly up in the league table for financial attitude – ranking 4th behind Indonesia (top), Slovenia and then Malaysia.
Digging deeper in the report, we find another area where Hungarians are lacking behind other nationalities. This is the section about keeping control of money, such as keeping a record of expenses and avoiding indebtedness mainly due to regular and conspicuous consumption. Sadly, Hungarians are at the bottom of the table here, suggesting that we are indeed exposed to significant levels of indebtedness.
Low financial literacy is a global concern, that became mostly evident during the 2008 financial crisis and has not shown great improvement since, despite the numerous programs in the last two decades supported by governments and private organisations that were meant to improve financial literacy within the population.
For example, in 2018, Hungary introduced financial literacy as a new subject in schools. There are also educational pages on the websites of Hungarian banks such as OTP which bring awareness and give some sort of guidance on how to manage our finances in the most effective way. It is also worth mentioning here the ever so popular Hungarian version of Monopoly called ‘Gazdálkodj okosan!’, which is also an excellent tool to teach financial skills. The number of these programs and tools is still scarce compared to what is available for the population of developed countries and show little positive effect on our everyday life.
A survey by OTP Bank shows that
42% of the Hungarian population is overspending, which is most common among those under the age of 30, with every 50% of those claiming that they soon regret spending on unnecessary purchases.
It is, indeed, true that theoretical knowledge and awareness of financial terms is not necessarily sufficient to improve our financial wellbeing which, in turn, does have a significant effect on our general wellbeing in this materialistic period of the human history, but it can definitely have a positive effect on that if paired with a little consciousness.
The winter holiday season and December in particular represents the highest temptation for overspending, especially due to the highly attractive Christmas fairs and ‘great’ offers of ‘amazing’ products suggested by the endless TV adverts.
It is worth, however, to ask ourselves whether we need those, or we will be regretting the purchase of half of them in January. We might get a pleasant surprise by trying to ‘speak finance’ and perhaps we’ll put more effort in learning this ‘language’ next year.