What is financial education

Financial education is about understanding how financial products (such as bank accounts, cards, mortgages or pension plans) work, the risks they involve and the benefits they offer, so you can make informed financial decisions.

Financial education enables you to make responsible and informed decisions so you can plan your future. It helps you navigate the world of finance and gives you the confidence you need to deal with your bank and to be aware of your rights and obligations when taking out financial products.

In everyday life, financial education can help you manage your expenses and income, so you can make the most of your money and set realistic and achievable saving targets.

If you have personal or family plans, financial education can help to achieve them, helping you, for example, to manage a budget, to understand financial concepts such as APR or to weigh up the possibility of taking on long-term debt in a sustainable way.

If you are an entrepreneur, financial education can also help you to manage your business efficiently and be more competitive.

If you are at the stage where you are thinking about retirement, financial education can provide you with tools to prepare appropriately.

Financial education can therefore help improve your quality of life.

The OECD and other international organisations are supporting citizens’ financial education.

International organisations such as of the Organisation for Economic Co-operation and Development (OECD), the International Monetary Fund, the G20 and the European Commission consider public financial education to be a valuable tool in ensuring the protection of financial consumers and investors, and strengthening international financial stability.

Indeed, investors and the final customers of financial products have always been the weak link in the "customer-bank relationship" -as the recent financial crisis has clearly shown- since they lack credit institutions’ technical expertise. Recently, moreover, the financial market has become increasingly sophisticated and difficult to understand, meaning financial services users are assuming greater risks and more responsibility for their financial decisions. Moreover, increasing life expectancy and the falling birth rate makes it necessary to plan carefully for the future.

For this reason, many countries, including Spain, are now following the OECD’s recommendations and have started to develop national financial education strategies.

Since 2008 Spain has been implementing the Financial Education Plan through a collaboration agreement between the National Securities Market Commission (CNMV) and the Banco de España, with the Ministry of Economy joining later.



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