The case in brief
- The PISA survey reveals low economic understanding among 22.8 percent of 15-year-old Norwegians, which worries the Norwegian Directorate of Education.
- NHH Professor Ola Grytten expresses concern about the lack of financial knowledge among Norwegians, especially young people, and emphasizes the importance of early financial education.
- The increase in Norwegian consumer debt, which rose by 4.9 percent in the first half of 2024, points to the need for better basic training in personal finance.
- Schools, parents and the financial industry are encouraged to work together to improve financial education to prevent future financial problems among adults.
The summarization is done with artificial intelligence (AI) from OpenAI. The quality of the content has been confirmed by TV 2 journalists.
– Sometimes I get scared when I find out how little some people know about economics, says NHH Professor Ola Grytten.
– What scares you?
– Lack of knowledge on things that are completely fundamental, for example how much the interest cost is when taking out a loan, or stories about people using credit cards to pay their bills. It’s really terrible.
Grytten refers to the adults, but this case is particularly relevant to the youth. Future bank customers, borrowers and debt slaves.
– They must learn economics at a young age. What they can’t do when they’re 15, they probably don’t know when they’re 20 either, Grytten says.
EDUCATION: In 2020, personal finance entered primary school through the subject “Public health and life management”. Before that, the students had not learned much about this subject, according to the experts. Photo: Gorm Kallestad / NTB
– That worries me
The background is the new one PISA survey which arrived in December last year.
The results caused quite a stir when they revealed that Norwegian pupils perform lower in mathematics, reading and science.
This summer, this survey yielded an additional result, showing that many Norwegian 15-year-olds for a poor understanding of economics. In addition, there are big differences in what they can do.
– It worries me that many of our young people function at the lowest levels, said the Director of the Directorate of Education, Morten Rosenkvist.
WARNING: Director Morten Rosenkvist in the Directorate of Education says that financial knowledge is important to avoid ending up in debt traps as an adult. Photo: Gorm Røseth / TV 2
They cannot do this
Because of hearing but here: Although the financial competence of the 15-year-old total scores “average”, a total of 22.8 percent of the students end up at a “low level”.
Of all the 14 OECD countries in the survey, only Costa Rica had a higher percentage of low performers than Norway.
Although most Norwegian students know about salaries, budgets, bank loans and bank cards, only half of them know the terms shares, pension plan, interest expenses, income tax and exchange rates.
Professor NHH Grytten wants everyone to learn about interest costs in particular as soon as possible.
– It is very important to understand that it costs money to borrow money, and that the price can become very high over time. This is especially true for those who take out consumer loans and incur credit card debt.
Here’s a simple explanation:
Interest it is the cost of borrowing money, expressed as a percentage of the loan amount per time period. It is also a reward for saving money in a bank.
Interest costs it is the amount paid in interest on borrowed money. This includes the cost of having debt, such as mortgage or credit card debt.
inflation a general increase in the prices of goods and services over time, leading to a decline in the purchasing power of money.
Currency is the monetary system used in a country. Examples are the Norwegian kroner (NOK), euro (EUR), and American dollar (USD).
Exchange rate is the price of one currency measured in another currency. For example, how many Norwegian kroner do you need to buy one euro.
Stock they are shares in a company. When you buy shares, you become a part owner of the company and can receive a dividend or gain on sale.
Pension plan it is an agreement that ensures income after you stop working. It can be state-owned, like the national insurance, or private, like an occupational pension.
Income tax it is a tax on your income, such as salary, pension, or other income. The tax is used to fund public services and welfare schemes.
Increased consumer debt
Because there are many people who spend money they don’t really have.
Numbers from The debt program It shows that Norway’s consumer debt increased by 4.9 percent in the first half of 2024, compared to the same period last year.
This gives an increase of NOK 7.6 billion, and reinforces a trend that has been increasing for years.
Regional director Magnar Meslo at Nordea in Trondheim believes that a lack of primary education in personal finance may be partly to blame.
– In previous years, you may have never learned about the consequences of getting consumer loans or the importance of interest costs. Then it’s easy to make quick, bad decisions, he says.
More pressure today
Because spending money has never been easier.
With the help of money tools like Vipps and the general digitization of the economy, the director of the bank believes that it is more difficult for young people to judge when the piggy bank is bleeding.
– Young people no longer receive their weekly wages in cash. Therefore, they do not notice that the wallet is empty in the same way as before. The economy is digital, and young people are exposed to pressure to buy on social media and across all channels.
– Do you think it’s harder to be young financially today?
– Yes I believe. The companies that will sell to young people have a very good reach through Instagram and Tiktok. At the same time, there is more pressure to wear branded clothes and expensive status symbols. This probably made resistance more difficult, says Meslo.
BUILDING AWARENESS: Regional director Magnar Meslo at Nordea in Trondheim says that it is a completely different economic reality for today’s young people, compared to their parents’ generation. Photo: Nordea
– See it with your own eyes
So what can be done? There is a topic titled “Public health and life management», and personal finance is one of the topics.
Meslo and other Nordea delegates visited schools themselves to talk to young people about finances and spending money.
– We see there with our own eyes that there is a great need and desire for young people to learn this.
– What is the most important thing a 15-year-old should focus on?
– I think we need to go back to the basics. What is your income, and how can you plan by establishing a simple budget.
Meslo says it’s important to be concrete, and show young people how they can manage their mobile bills, adjust their consumption, and especially experience the joy of saving on something they want to buy.
LEARNING: Will personal finance be an even bigger part of tomorrow’s curriculum? At least that’s what the economic experts want. Photo: Gorm Kallestad / NTB
Final consequence
The bank director is however careful not to put the responsibility of financial learning on the schools alone.
– I think we all have a responsibility. Schools, parents and the financial industry all need to be involved to ensure that young people have good exposure to the economy as adults.
Grytten clearly believes that schools should have a stronger focus on teaching students about personal finance.
– In addition, an introduction to the social economy should also be given, to give a greater understanding of how things work.
– Do you think this has been under-emphasized in previous years?
– Yes I believe. People don’t know much about interest, inflation and loans.
– What are the consequences if there is no more training around this?
– Then you get a spiral where people make worse choices, resulting in very high costs. In the worst case, you never get your money in order, Grytten concludes.