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The link between financial literacy skills and social disadvantage are now being connected, according to a new chapter from the PISA 2015 report that shows that financial literacy skills tip the scales of economic advantage.

The OECD's PISA study that looks into 15-year-old students' performance in different subjects contains a specific analysis of their financial literacy skills. This latest chapter was published today and reflects the results of 10 OECD and five non-OECD countries (Belgium Flanders, Canada, the Netherlands, Australia, the United States, Poland, Italy, Spain, the Slovak Republic and Chile from the OECD, and China, Russia, Lithuania, Peru and Brazil).

With 56 percent of the tested students holding bank accounts, and 64 percent of 15-year-olds earning money from formal or informal work, one of the key messages from the report is that financial literacy, strongly correlated with reading and mathematical literacy, is essential for the protection of consumers. The study finds that 22 percent of students are below what is considered to be the baseline level of financial literacy.

More key findings

-          The study relates high levels of social disadvantage with low levels of financial literacy. For instance, students with immigrant background had significantly low levels of financial literacy.

-          There is a clear divide between the 12 percent of students who are deemed to be at the highest level of financial literacy while 22 percent are at the lowest level.

-          With some variation between countries, there is a correlation between high levels of financial literacy and high levels of achievement in mathematics and reading.

-          Parents have the greatest influence of young people’s learning about Financial Literacy

-          On average girls have higher levels of financial literacy than boys.

Beyond accounting

Education International (EI) has issued its own appraisal of this PISA 2015 chapter, in which it acknowledges the importance of financial literacy when it comes to managing finances and planning how to use them. “Financial Literacy, however, is not a value neutral issue. How money is used and its relationship to such issues as economies, taxation, accountancy, well-being and life chances are critical to the creation of good societies”, reads EI’s statement published after the official launch of the financial literacy chapter.

The statement concludes that while the OECD is right to highlight the importance of young people being financially literate it can only be a part of the jigsaw of tackling exploitation, discrimination and disadvantage.