This blog post calmly examines the background behind why savings-centered thinking no longer guarantees personal happiness, through three axes: financial literacy, family education, and changes in social structure.
Financial Literacy Survey of Elementary Students
Some people may find that the more they learn about financial products, the more confused they become, and the less confident they feel about earning money. It might even make you wonder if those who earn money well are simply born with special talents different from ours. However, to effectively manage assets through financial products, financial literacy is paramount. Dr. Cheon Gyu-seung, a senior fellow at the Korea Development Institute, explains the importance of financial literacy as follows:
“Financial literacy is an essential quality for individuals to lead more efficient and rational financial lives, thereby achieving greater prosperity.”
Nowadays, modern life is inextricably linked to ‘finance’. Finance is no longer the domain of a select few; it has become an everyday commodity used by the vast majority of citizens. It’s actually harder to find someone completely disconnected from finance. The importance of finance can only grow in the future. So, what is the level of financial knowledge among our children, who will become the protagonists of tomorrow’s society? Especially considering that habits and attitudes formed in childhood are difficult to change in adulthood, the importance of early financial education cannot be overstated.
The EBS DocuPrime reporting team decided to measure the financial literacy level of elementary school students based on research into adult financial literacy indices. In collaboration with the Korea Development Institute, they conducted the “Elementary School Student Financial Literacy Survey” from September to December 2011. Dr. Cheon Gyu-seung explained the purpose of this research as follows:
“Once a person’s financial tendencies are formed, they often become fixed. To understand the direction financial education should take for the financial welfare of our entire society, testing the financial literacy of elementary students is absolutely necessary.”
The survey was conducted with 656 upper-grade elementary school students nationwide. The results showed the average score for all respondents was 76 points. By subject area, risk management and insurance scored the highest at 86.3 points, while credit and debt management scored the lowest at 68.8 points. Although this was higher than initially expected, a closer look at the content reveals other issues. While the children recognized the importance of credit management itself, their practical understanding of where and how to use credit cards, and how to manage and repay debt, was very low.
Particularly noteworthy was the finding that children who regularly received an allowance demonstrated relatively higher financial literacy. Children who received a consistent allowance and had experience managing it themselves showed higher overall financial literacy. Handling money directly naturally cultivated their management skills. Children with desirable financial attitudes also scored higher. They exhibited a strong aversion to debt, and higher financial literacy correlated with a more negative perception of debt.
The analysis of the relationship between the frequency of conversations with parents about spending money and financial literacy was also interesting. Students who reported talking with their parents about money once or twice a month scored the highest across all areas. Conversely, children who reported talking frequently scored lower, suggesting that money talk at home often becomes nagging rather than education. Regarding this, Dr. Cheon Gyu-seung points out:
“Because parents themselves lack financial education, proper home education isn’t happening. We need discerning financial education that guides parents on what to teach children and what topics to avoid.”
Survey on Economic Perceptions of Parents and Adolescents
Our parents’ generation considered bringing up money itself shameful. An attitude of neither pretending to have what you didn’t nor pretending to have what you did was seen as a virtue. So what about us?
How exactly are we teaching our children about money? How accurately do children understand their family’s financial situation?
The DocuPrime reporting team conducted a “Survey on Parents’ and Adolescents’ Economic Awareness” in collaboration with Professor Kwak Geum-ju’s team from the Department of Psychology at Seoul National University. The survey targeted 524 middle school students and 396 parents residing in the Seoul area, using a questionnaire consisting of 40 questions across 7 detailed categories.
First, when asked about the household’s total income, the response rates between adolescents and parents showed a clear discrepancy. Professor Kwak Geum-ju explains this as follows.
“Comparing the income parents actually stated with the household income perceived by adolescents, the adolescents perceive it to be significantly higher. This means adolescents think ‘our family is well-off.’”
This indicates that adolescents do not accurately understand their family’s financial situation. Similarly, when asked to assess their family’s current social position using a 10-step ladder, children rated their position higher than their parents did. Their perception of their standard of living compared to neighboring households was also similar. Children felt their family was significantly more affluent than their parents did.
Ultimately, this indicates that parents are incurring significant expenses to prevent their children from feeling deprived, contrary to the actual situation. When asked if they felt the economic downturn, 48% of adolescents and 25% of parents answered “no.” This shows parents have strived to shield their children from the effects of the recession. Professor Kwak Geum-ju explains this phenomenon as follows:
“Parents bear significant expenses to ensure their children feel a certain level of affluence, even when they themselves are not in such a situation. Whereas in the past, parents might have sold a cow or farmland to send their child to university, today, even when finances are tight, they spend on private tutoring and often send their children abroad for early education. In this environment, children come to perceive that ‘our household has a decent income.’”
Perceptions about financial support were similarly consistent. Children tended to believe they were receiving sufficient investment and expected this to continue. One child interviewed during the survey remarked, “My parents earn money to spend on me anyway.” This vague sense of entitlement can weaken adolescents’ independence and lead to a failure to achieve economic self-sufficiency even in adulthood. Newspaper headlines like “Wedding Marches Tearfully Paid for by Parents,” “The Reality of 50-60 Year Olds Struggling to Fund Their Children’s New Homes,” “The Era of Three-Generation Co-Residing Kangaroo Kids,” and “Adult Children Living Off Parents Skyrockets in 10 Years” are not someone else’s story.
Financial literacy is essential for survival
There’s no need to hide or hush up family finances anymore. Honestly sharing household economic circumstances is the starting point for financial education. Song Seung-yong, Director of Hope Financial Planning, emphasizes that to achieve this, we must first embrace the mindset that “money is a means to happiness.”
“There’s no need to make money such a taboo topic in children’s education. Attitudes like ‘you mustn’t talk about money’ or ‘just focus on studying’ are undesirable. Money isn’t inherently bad; it’s a means to live happily. It’s crucial to recognize that understanding finance is necessary for this purpose.”
Expert Committee Member Cheon Gyu-seung also stresses a paradigm shift in financial education.
“The very framework of financial education must now change. The OECD also states that financial literacy is not optional knowledge but an essential survival skill. The reality is that without financial literacy, it is difficult to survive.”
Ultimately, the financial decisions of individuals and households are determined by their level of financial literacy. This varies significantly depending on the financial education received during adolescence at school, home, and in society. It has already become clear that financial knowledge and the ability to apply it can further widen the wealth gap. Therefore, financial literacy is now a mandatory competency, not an option.
The Four Pillars of Financial Life: Saving, Investing, Spending, Giving
So, how does the United States, a financial leader, educate its children? In 2002, the U.S. government promoted financial education at the federal level, establishing the Office of Financial Education under the Treasury Department. It built a systematic education system based on the ‘Jump Start Consumer Financial Education Standards’.
Among these, ‘Money Saves’ is a flagship financial education program operated by the Chicago Department of Finance. It uses a four-compartment piggy bank to teach balanced savings, spending, giving, and investing. The most crucial first compartment is savings, followed by spending, giving, and investing. Children learn the meaning and importance of each element through communication with their parents.
Westridge Elementary School in Chicago implemented Money Saves financial education in 2011. Teacher Phyllis Diakatos states:
“When children learn how to save, spend, invest, and give from a young age, they are much better equipped to do so as teenagers and adults.”
Chicago Treasurer Stephanie Neely also emphasizes that financial education should start in school but extend into the home.
“Financial education begins in school, but it must continue routinely at home. We always say, ‘Your money, your choice.’”
Recently in Korea, to respond to the changing financial environment, standard financial education guidelines for elementary, middle, and high schools have been established, and textbooks reflecting these are being distributed. This lays the groundwork for more realistic and systematic financial education. But is school education alone sufficient? What about adults who have already graduated?
Professor Raghuram Rajan reiterates the necessity of adult financial education.
“While understanding financial basics as a child is important, when you actually start investing, retraining is absolutely essential. The most crucial message is that earning money is extremely difficult. Yet amid the financial frenzy, this message is not being properly conveyed.”
The moment we start investing, we must learn anew. And that education must include an understanding of risk. Living in a financial capitalist society without financial literacy is no different than entering a battlefield unarmed. To survive in this rapidly changing society, it is now time for both children and parents to actively participate in financial education together.
