The G20 Finance Ministers’ Meeting was held in Paris in September 2011.
During this meeting, the Organization for Economic Cooperation and Development (OECD) announced the “Principles on Financial Consumer Protection,” which were subsequently adopted as a joint declaration at the November meeting of the same year.
The “Principles on Financial Consumer Protection” comprise ten general principles aimed at protecting financial consumers.
One of these principles encourages the enhancement of financial consumers’ knowledge and capabilities.
This suggests that related institutions should establish solid educational systems to assist financial consumers effectively.
According to Korea’s Financial Education Council, financial education is defined as activities that support the understanding of relevant knowledge and foster the right attitudes towards finance, promoting sound behavior.
In Korea, various institutions provide infrastructure for all age groups. For instance, the Youth Financial Education Council offers financial education for adolescents, and the Korea Inclusive Finance Agency provides practical finance courses for young adults.
Thus, financial education in Korea has seen quantitative growth, primarily driven by the private sector.
Financial education has now become an essential part of our lives, and this article aims to analyze the importance of financial education and its implications in depth.
The first reason why financial education is important is that it helps individuals develop a proper economic mindset.
If a person has the right values about the economy and money, it can have a profoundly positive impact on their life. With proper values, individuals can make wiser financial decisions and adopt healthier lifestyles.
For example, cybergambling has become a significant issue among adolescents. The ease of accessing gambling sites through smartphones in internet-enabled environments is a contributing factor.
Similarly, various forms of gambling are also problematic among young adults.
Therefore, financial education is believed to be a direct solution to such problems.
Through systematic financial education covering market concepts and opposing principles, individuals can cultivate desirable values regarding finance.
The second reason why financial education is crucial is a continuation of the first. Proper values about money are expected to contribute significantly to developing prudent investment habits.
This can provide individuals with new perspectives on finding opportunities by analyzing the flow and properties of capital in the market, rather than pursuing high-risk products promising quick returns.
If the public recognizes and practices the importance of sound investment habits, a fairer financial society can be established.
The third reason for the importance of financial education is its significant contribution to reducing the digital divide.
Due to advances in online technology and the prolonged COVID-19 pandemic, many financial institutions have shifted their services from face-to-face to non-face-to-face formats.
Consequently, there are concerns that the elderly, who might not fully utilize online services, could face some disadvantages.
Moreover, with the activation of online services, various financial products have been launched.
This can be confusing not only for the elderly but also for young people who might struggle to determine which products best suit their situations.
Therefore, financial education is seen as a practical solution to these issues. Financial education can minimize the digital divide and help individuals make appropriate decisions.
Lastly, the importance of financial education can be viewed from the perspective of preventing financial fraud.
According to statistics from the Financial Supervisory Service, the estimated domestic damage from voice phishing, a common form of electronic fraud, amounted to around 500 billion won last year.
With the increasingly sophisticated forms and methods of voice phishing, the damage continues to rise each year.
Thus, promoting financial education can be the starting point for preventing such damage.
Financial education can provide individuals and society with the knowledge and coping strategies needed to prevent various forms of financial fraud.
The importance of financial education mentioned above is not limited to enabling individuals to lead healthier financial lives.
The more individuals internalize proper financial habits, the more this can be connected to national economic growth from a macroscopic perspective.
In other words, financial education can enhance the overall economic consciousness of the populace, directly impacting national economic improvement.
Therefore, individuals and society should fully recognize the importance of financial education and actively strive to improve financial literacy.