Taiwanese were more financially resilient this year than they were two years ago, a survey released in October by the Taiwan Academy of Banking and Finance (TABF) found. Still, those aged 20 to 29 were the only group that showed a decline in financial resilience, with about 43 percent of young people being close to financial illiteracy, the survey showed.
There are three important findings this year in terms of savings, living expenses and access to financial services in the annual survey, conducted from April to June. First, the COVID-19 pandemic raised awareness of the financial crisis, and more workers have at least six months of income saved than in the previous survey in 2020. Second, there is a marked improvement in people’s overall ability to meet living expenses, and the number of people able to deal with a financial emergency is also higher than it was two years ago.
However, the survey found that more than 40 percent of young people do not have enough knowledge to make essential financial decisions, making them vulnerable to financial fraud and investment scams. This third finding echoes another survey recently released by the Financial Literacy and Education Association, which indicated that nearly half of young people in Taiwan do not have the necessary skills to manage personal finances, budgeting and investing.
Young people’s blind spots regarding financial literacy include wanting to invest without enough savings, spending entire salaries by the end of the month, relying on credit card installment plans to make ends meet and falling into credit repayment traps, while young people also have a weak concept of credit and lack awareness of the consequences of impaired credit, the TABF survey showed.
Furthermore, the survey showed that having insufficient knowledge of financial laws poses another threat to young people, with some being defrauded, while others unintentionally became accomplices to scams. There were 8,207 fraud suspects aged 18 to 23 in Taiwan during the first 10 months of this year, accounting for 21.87 percent of fraud suspects in all age groups, National Police Agency data showed.
As the age of majority — the legal threshold of adulthood — is to drop from 20 to 18 on Jan. 1, as per a 2020 legal amendment, a larger cohort of younger people, at a younger age, will be able to apply for credit cards by themselves and sign business contracts independently. At the same time, they must also be responsible for their behavior under the Civil Code and Criminal Code. This means that financial education is urgently required for young people.
Although sections of the Ministry of Education’s 12-year compulsory “108” curriculum are intended to cultivate financial literacy, most teachers polled said that they face difficulties guiding students in this area, given their own lack of knowledge and teaching experience in financial matters, along with poorly designed finance courses.
Taiwan could learn from countries such as the US, the UK, Australia and Japan, which have implemented national financial literacy strategies. For example, the Ministry of Education could require senior-high schools and vocational schools to include financial education as a compulsory course. The government could also promote cooperation among academic institutions, financial firms and schools — from elementary to senior-high levels — to prepare teaching materials and offer courses.
Meanwhile, the media have a role to play in reporting financial news responsibly. They should help popularize financial knowledge and related laws with easy-to-understand explanations, so that basic financial knowledge becomes common sense to the public.
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