Financial Wellbeing

I spoke at a Financial Wellbeing conference today hosted by JA Malta Foundation about the connection between financial education and the economy.

I asked the audience what “good” looks like and asked them what the outcomes would be if we really get financial education right. As expected, there wasn’t a single negative answer and thus, it’s clear that there isn’t a downside to this!

So what happens if nations don’t show leadership in this space?

… Wealth inequality (and the Journal of Political Economy points out that 30-40% of the wealth gap at retirement could be closed by better stock market education to pursue bettter returns).

… Social media (and Qualtrics notes that 52% of gen Z turn to TikTok for financial advice)

… Regulation (as after introducing auto-enrolments 20 years ago in Australia, it now has superannuation funds worth 130% of the economy).

It’s a very important time to get this right because:

1. Vanguard estimates that by 2030, $18.3 trillion will have transferred between generations around the world.

2. House prices have increased by 62% in Malta over the past 15 years and there is a shortage of both housing to buy and rent. (We recognise this trend in Ireland too!)

3. People are (gratefully) living longer. The World Healh Organistion estimates that life expectancy (at birth) in Malta has increased by 4 years since 2000.

However, if we know how important financial education is to an economy, where is it going wrong?

I think there are two reasons.

Financial literacy isn’t enough on its own. If somebody knows what inflation is, it doesn’t mean they can budget. If they know what an interest rate is, that’s not to say they can gain from the power of compounding. Financial literacy needs to be woven together with digital literacy and a personal growth mindset.

We need to speak to people in a language that means something for them. Why focus on saving for the rainy day whenn we can talk about having money to take the opportunities of a sunny day. (The money is there for the rainy day then, by default!)

While an economy is measured in GDP and other objective metrics, we need to empower people to take care of themselves by empathising with them about what money means including the impact it has on relationships (that speedily finds its effect back on the economy again), the intergenerational effect we can see separate to inheritance, how the narrative around money needs to move from extracting joy to adding it, to the power structures that money changes and the autonomy that comes with choice.

Thank you Petra Ellul Mercer for the opportunity to speak at this event, to Mairead McGuinness for organising the hashtag

#MoneyMatters conference in April in Brussels that enabled us to meet and as always to CFA Society Ireland for giving the opportunity to bring hashtag

#MoneyMatters to life in every school in Ireland since 2021.

Marie Gaffney, CFA Noel Friel Eoin Diffley Niall McDonnell, CFA Aisling Boland, CFA, CIFD Eoin Fitzpatrick, CFA