Youths’ understanding of personal finances

An increasing number of youths lack a basic understanding of economical concepts. MindLab drew a picture of the youths’ choices and provided ideas to improve their knowledge of personal finances.

What does interest rate mean? Am I automatically entitled to unemployment benefit if I loose my job? And what is my responsibility when it comes to tax payment? Recent analyses show that many youths are incapable of answering these questions and that youths generally lack a basic understanding of economical concepts. This entails that 7% of Danes in the 18-27 years age group are registered as bad payers by Experian.

The Ministry of Taxation, Ministry of Employment, and Ministry of Economics and Business Affairs wanted to know how the ministries could improve youths’ knowledge of the economical aspects of being citizens in a welfare society, e.g. personal finances, unemployment and tax. The purpose was especially to understand how upper secondary schools can teach fundamental economical concepts and make them relevant to youths.

”I have the idea that it pays off to create your own job. And if I am unsuccessful and unable to get employed, then I would think that I am entitled to unemployment benefit”

Joachim, sixth form student

Joachim is a 19 year old student with high ambitions. He is generally optimistic about his future, because he thinks he will be able to shape it. But the fact is that if he does not have insurance nor has less than 10.000 kr. in savings, then he will not be eligible for unemployment benefit.

MindLab interviewed

• Secondary school students and cooking students
• Secondary school teachers and teachers from Copenhagen Hospitality College
• Danske Bank, Young Enterprise and other experts on developing teaching materials
• Government officials from Ministry of Taxation, Ministry of Employment, and Ministry of Economics and Business Affairs.

Principal results

• Five insights into the way that youths thinks about their personal finances and make choices that intentionally or unintentionally affect their economical situation. The insights showed new possibilities when communicating economics, tax and employment situation, which may make the communication appear relevant to youths.
• Specific suggestions on which economical information that secondary schools students and cooking students could benefit from through their education
• A variety of sketches on possible educational materials

MindLab did

MindLab interviewed four upper secondary school students and four cooking students from Copenhagen Hospitality College to find out what personal finances mean to youth and how personal finances are influenced by thoughts and choices in their everyday life.

The five insights from the interviews were then used to develop suggestions on how communication efforts on personal finances, unemployment and tax issues can be focused to match the way youths already think and handle their personal finances. The youths we interviewed would experience formal education on budgeting and getting an overview of their financial situation as irrelevant, because “overview” to them means logging on to their internet banking service to check their balance. If the budget on the other hand was headed by “See how easily you could realise your dreams”, it would to a higher degree embrace youths’ approach to their financial life.

”If there is anything I want and can’t afford, well, then it’s just not possible. That is the way I have always thought. So when my dad asked if I should make a budget, then I thought that I have always worked it out without one, so why shouldn’t it work out now?

Cecilie, student, Copenhagen Hospitality College