21.03.2025
Among Estonians, 31% consider their financial literacy to be good and 16% to be bad, according to the results of the Norstat survey commissioned by LHV. At the same time, young people’s assessment of their financial literacy is the highest among different age groups.
A total of 37% of 18–29-year-olds believe that their financial literacy is good. Yet, they are often reluctant to take concrete steps to build their future security. ‘As a rule, the income of young people is not high, but they have an active social life that requires expenditures. It is certainly not worth tightening your belt endlessly in the name of saving and letting life pass you by, as this tends to result in a loss in the consistency and motivation that form the foundation for creating an investment habit. Time is the investor’s greatest friend, and even small but regular contributions help to build a financial foundation,’ says Nelli Janson, head of the LHV investor community. Good solutions are, for example, automatic payments to a savings account or into the 3rd pension pillar. ‘The processes taking place in the background help to make saving and investing a convenient and almost unobtrusive habit,’ Janson suggested.
Compared to young people, middle-aged people rate their financial literacy to be lower. The survey revealed that 27% of 40–49-year-olds and 28% of 50–59-year-olds consider their financial literacy to be good. Janson said that people in these age groups still have plenty of time to boost their future security. ‘When today’s middle-aged people were in their youth, money wisdom and financial freedom were not common topics, but it is never too late to acquire new knowledge. The greatest contribution to increasing financial security can be made by individuals themselves, and today there are many asset classes with different levels of risk on the market, where they can try their hand, learn, and grow their appetite,’ said Janson.
She noted that the money wisdom of the Estonian people is growing, but it is more important than theoretical knowledge to apply it in practice. ‘Only real decisions and actions create change, and investing is the only way to grow money in the long run,’ Janson said. She pointed out, based on international studies, that 80% of non-investing people tell themselves to start with it at some point in the future. Unfortunately, this moment often never comes, because the brain finds a new excuse. As a result, money remains to be bitten by inflation. ‘Accumulating for retirement, investing, and saving should be a natural part of everyday money planning for all age groups,’ Janson believes. She added that it also supports mental health, as fear of coping is one of the most important sources of anxiety. ‘Studies show that people who invest regularly feel 40% less financial stress than those who do nothing,’ Janson pointed out.
The Norstat study also revealed that the assessment of one’s financial literacy increases with income. For example, while 67% of people earning EUR 2,751–3,000 consider their financial literacy to be good, the respective figure was 44% of those with an average wage (i.e. EUR 1,751–2,000) and only 18% of those with an income of EUR 1,001–1,250.
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