The influence of informal learning opportunities on adolescents’ financial literacy

Although a number of relevant national and international studies exist, some differ considerably in their conceptual design (Aprea 2012; Kaminski and Friebel 2012) due to the fact that these studies refer to different constructs (e.g., financial knowledge, financial literacy, financial education, or financial capability) that are not uniformly defined in the literature (Aprea 2012; Liening and Mittelstädt 2011; Reifner 2011) or differ in their conceptualization from financial literacy and, thus, in the specific model of a financially educated person on which they are based (Aprea 2014). Referring to Aprea (2014), the following three types of conceptualizationsFootnote 2 can be derived:

Manager of personal financial issues.

Responsible consumer.

Responsible economic citizens.

The most widespread conceptualization approach in research is aimed at personal financial management. The focus is primarily on individual financial decisions relating to private life and household management, such as the daily handling of money and loans, the insurance of life risks, the accumulation of assets, and old-age provisions. This approach focuses on economic subjects in their role as consumers, thereby reducing it to the consumer perspective (Aprea 2014). Nevertheless, this framework is the basis for a large number of studies and publications that focus on knowledge or competencies in the financial sector (Schlösser et al. 2011). With the mission of developing responsible consumers, personal financial management is extended to include the aspect of responsible consumption. The focus here is on the ability to critically reflect on one’s own needs and purchase decisions and to control them in a targeted manner. The objective is the reduction of information asymmetries existing in consulting and sales situations. In addition, the rights and obligations of consumers in their relationships with other financial market players are relevant in this approach (Aprea 2014). Reifner’s (2011) work is representative of this approach. In addition, the central idea of a responsible economic citizen includes in particular the embedding of personal financial decisions in an expanded and comprehensive context of economy and society; therefore, the main focus is not only on the consumer perspective. Thus, the approach presented here also includes monetary policy aspects and the relevant role of the state in this context. The regulation of financial markets and the influence of international interdependencies are also central issues. Not only are such macroeconomic aspects relevant for private financial decisions, but citizens are rather regarded as co-designers of institutional framework conditions and should be enabled to participate in the shaping of a democratically compatible economic and financial system. The conceptualization approach presented here is thus more comprehensive than the first two variants and can simultaneously be described as systemic because, as has been shown, it also includes a political dimension that goes well beyond the pure consumer perspective (Aprea et al. 2015; Aprea 2014). Only recent research projects and publications increasingly follow the comprehensive conceptualization approach of the responsible economic citizen described thus far (e.g., Aprea and Wuttke 2016; Kaminski and Friebel 2012; Retzmann and Seeber 2016). This approach is also taken up in this paper (see “Methods” section).

In recent years, there has been an increase in the number of studies focusing on financial literacy of adolescents (e.g. Amagir et al. 2018; Aprea and Wuttke 2016; OECD 2017a; Rinaldi and Todesco 2012; Rudeloff 2019; Schürkmann 2017; Sohn et al. 2012). A lack of knowledge among the participants was identified in all studies. The PISA study from 2015, for example, shows that, despite differences in performance among countries, a large proportion of students have only a basic knowledge of financial literacy. On average, 22% of students in OECD (Organisation for Economic Co-operation and Development) countries have skills below level 2, which is considered the baseline levelFootnote 3 (OECD 2017a); at best, these participants can only see the difference between needs and demands, make simple decisions about daily expenses, understand the purpose of everyday financial documents such as an invoice, and perform simple arithmetic operations (OECD 2014). The results of the Financial Literacy Study (FILS) (Schürkmann 2017), which used young people as a target group, also show that financial literacy varies depending on the subject area. Regardless of the type of school, students show weak skills in the areas of insurance and taxes, debt, and monetary policy whereas their skills in the areas of wealth formation and the use of online services are very pronounced in the majority of respondents.

For the analyses on which the article is based, however, not only previous study results on the state of financial literacy among young people are relevant, but also research results that identify variables related to financial literacy. On the one hand, research findings on informal learning opportunities have to be taken into account and, on the other hand, results on socio-economic and personal variables are relevant. Socio-economic and personal variables related to financial literacy are essential as control variables for this quantitative study (see “Methods” and “Results” sections). In order to identify possible informal learning opportunities related to financial literacy, studies on financial socialization (e.g. Grohmann et al. 2015; Jorgensen and Salva 2010; Shim et al. 2010, 2015; Solheim et al. 2011) and studies on the financial literacy of adolescents that take into account socialization aspects will be considered (e.g. OECD 2017a; Schürkmann 2017).

A multitude of empirical studies dealing with financial socialization focus on collecting retrospective data from young adults on financial experiences or interactions with their parents (e.g., Clarke et al. 2005; Kim and Chatterjee 2013; Shim et al. 2010). What the studies have in common is that they understand financial socialization as a process that extends from childhood to early adulthood, in which consumer roles are developed with the help of parents, teachers, friends, work experience and the media (Gudmunson et al. 2016). Overall, literature on financial socialization focuses on three or four socialization agents through which socialization takes place: family or parents, school, experiences at work and the media (Gudmunson and Danes 2011). The research mainly takes into account the first three socialization agents. For example, Studies by Shim et al. (2010, 2015) and Grohmann et al. (2015) analyze the correlation between parents, school and experiences at work and financial literacy. For example, Shim et al. (2010) confirmed that parents’ direct instruction with regard to financial issues and decisions are significantly associated with their children’s financial knowledge. The effect strengths of direct parental instruction compared to the other learning opportunities mentioned are approximately twice as high. At the same time, the study found that parents’ financial behavior is often adapted and affects not only their behavior, but also the attitudes of children and adolescents toward finance. In addition, the 2015 PISA study highlights the relevance of parents’ financial literacy to students’ financial performance. According to the study, parents are crucial for the development of their children’s financial attitudes, habits, and abilities as well as their financial knowledge. Parental financial literacy should therefore also be a focus of research and promotion. In ten countries, discussing financial matters with parents is accompanied by higher financial literacy, under the control of socio-economic status. This result underscores the importance of parental instructions (OECD 2017b). In addition, Shim et al. (2010) confirmed that teaching of financial content at school and work experience are significantly associated with children’s financial knowledge. Grohmann et al. (2015) were able to replicate the presented results except for the effect of work experience. The effect of work experiences is primarily based on experiences of having money available on a regular basis. Overall, this effect must be viewed in a differentiated way. For example, Nyhus and Webley (2013) come to the following conclusion that doing chores for money and having a job as an adolescent is linked to having less intention to save. In addition, Nyhus and Webley (2013) conclude that working as an adolescent could be a prediction of holding high levels of debt later on in life.

The possession of an account or the regular handling of money is also associated with financial literacy. The results of the 2012 and 2015 PISA studies show that students who have a bank account or regularly receive gifts of money or pocket money achieve better results in the financial literacy tool (OECD 2014, 2017b). The results underline the influence of one’s own experience in dealing with money, which was also replicated by Schürkmann (2017).

With regard to the personal and socio-economic background variables associated with financial literacy, a large number of empirical studies can be drawn upon (e.g. Bender 2012; Förster et al. 2018; OECD 2017a; Schürkmann 2017). The PISA studies from 2012 and 2015 (OECD 2014, 2017a) identified a positive correlation between financial literacy and skills in mathematics and reading. This effect has been proven in further studies on financial literacy, and a corresponding influence on basic cognitive skills has also been demonstrated (e.g., Grohmann et al. 2014; Herd et al. 2012). In addition, with the exception of a few studies (e.g., Mandell 2008), male learners have a knowledge advantage not yet sufficiently explained (e.g., Chen and Volpe 1998; Förster et al. 2018; Lusardi and Mitchell 2011).

At the same time, non-cognitive facets of competence are related to financial literacy. Thus a significant positive correlation between various motivational variables and financial literacy could be shown (Mandell and Klein 2007). The correlation between different positive and negative emotions and financial literacy, particularly between emotions and savings behavior, has also been empirically confirmed (e.g., Nenkov et al. 2009; Shahrabani 2012). Furthermore, a high subjective assessment of economic abilities is associated with better results in cognitive performance tests in the field of economics (Bender 2012). One’s attitude toward money could also be identified as a significant positive regressor of financial literacy, albeit with only small effects (Schürkmann 2017).

Financial literacy is positively related to age (Atkinson and Messy 2012). The educational level and income of participants’ parents are positively associated with financial literacy (e.g., Bucher-Koenen and Lusardi 2011; Lusardi and Mitchell 2011; Lusardi et al. 2009; Mandell 2008). The correlation between socio-economic status and financial literacy has also been considered in PISA and has been addressed through various aspects, such as the education and occupation of parents and their property relations. The results indicate the following relationship: Subjects whose family status can be assigned to a higher level are more likely to have a higher level of financial literacy. Moreover, a migration background is negativeliy associated with the test results (OECD 2014, 2017a).

In addition to the correlations mentioned thus far, a diploma or other certificate of graduation and the type of school are also connectet to financial literacy (Lusardi et al. 2009). In the PISA 2015 study, educational aspiration played a decisive role (OECD 2017b). Meanwhile, Bucher-Koenen and Lusardi (2011) demonstrated that participants’ educational background correlated strongly with their financial literacy. The result allows the following interpretation: The lower the respondents’ level of education, the more likely they were to have a lower financial literacy. Moreover, a positive attitude toward learning or an openness toward problem-solving aspects correlates positively with financial literacy (OECD 2014, 2017b).

Variables associated with financial literacy (Rudeloff 2019)

With the help of the presented explanations, a number of correlation between background characteristics and financial literacy could be identified, as shown synoptically in Fig. 1. For the hypothesis to be formulated from the research question, informal learning opportunities are particularly focused. The other variables related to financial literacy, including the influence of the school, are considered as control variables. In terms of informal learning opportunities, the empirical findings show that parents in particular play a central role, but that factors such as work experience are also relevant. Furthermore, the influence of a number of other informal learning opportunities can also be assumed, especially because, in young people’s world, further points of contact with financial topics and financial decisions become apparent, which can be the starting point for such learning processes (Rudeloff 2019). Examples include the different media (Reifner 2003). The following hypothesis can be derived from this understanding:

H: Financial literacy is influenced by informal learning opportunities. There are dimension-specific differences in the impact of informal learning opportunities.

The hypothesis was deliberately formulated in general terms, without naming specific learning opportunities, as there are currently insufficient empirical analyses that explore how certain informal learning opportunities affect young people’s financial literacy.