Patrick Debattista
Did you know that only 1 in 2 Europeans is able to pass a basic financial test? Worse still, as many as 80% do not understand the relationship between interest rates and bond prices (Bruegel, 2024).
The picture in Malta is hardly any rosier.
Although recent strides have been made, only 25% of the Maltese population is able to understand the concept of “time value of money”; a fundamental tenet in finance.
According to the OECD’s International Survey of Adult Financial Literacy, Malta ranks “below-average” in terms of financial knowledge.
There are no two ways about it: Financial literacy is alarmingly poor and the repercussions are dire. There is no data available locally, but financial illiteracy cost Americans around $440 billion in 2022 alone (NFEC).
And as our life expectancy increases and our birth rate continues its steady decline, we are sleeping at the wheel.

Why is financial literacy so poor?
In my view, the root cause of our financial literacy crisis lies in the lack of compulsory financial education in schools and University. Without proper foundational knowledge in managing their finances, how can we expect people to make sound financial decisions?
Also, objective, professional financial advice is often inaccessible to those who need it most. Financial advisors and wealth managers typically cater exclusively to the affluent, leaving the average person without the necessary tools to manage their personal finances effectively.
This disparity widens economic inequality and only serves to increase poverty.
Even the most significant financial decisions in our lives, such as purchasing property or even a new car, tend to be taken without independent guidance.
To add insult to injury, the advisor recommending which house to buy is also wearing a salesperson’s hat. The institution advising you to spend 30 years of your life repaying debt is also selling you this debt.
The Consequences of Financial Illiteracy
The absence of financial education has far-reaching consequences. People are ill-equipped to manage debt, save for retirement or invest wisely.
Sadly, as many as one in two Maltese residents experienced situations in the last 12 months where their income failed to cover their living expenses (Ġemma, 2024). This figure deteriorated from the last results published in 2018, when “only” one in three Maltese had faced this situation.
With inflation exceeding 7% in early 2023, such a finding is of added concern.
And with a nationwide political campaign in full swing, it is truly heartbreaking to see not one mention by any candidate of this urgent need for change.

So what can we do to take control of our finances?
Despite these challenges, there are several steps we can all take to improve our financial literacy and strive for financial independence:
Self-Education: The Internet offers a wealth of resources on personal finance. Websites, social media and online courses can provide valuable insights into budgeting, investing and debt management. However, make sure that whoever is sharing this content is qualified to do so. Look out for people who have the Chartered Financial Analyst (CFA) designation, for example.
Literature: Numerous books by financial experts provide guidance on managing your personal finances. However, most books tend to be generic and cater for a predominantly American audience.
Community Resources: Local libraries, community centres, and non-profit organizations often offer free financial literacy workshops and seminars. These sessions can provide valuable face-to-face guidance and allow individuals to ask specific questions related to their financial situations.
Professional Guidance: For those who can afford it, seeking advice from a financial planner can be invaluable.
Workplace Programmes: Many employers nowadays offer financial well-being programmes as part of their benefits packages. These include workshops, one-on-one financial planning and access to money management tools.
The Role of Policy Makers and Educators
While we all can take steps to improve our financial knowledge, there is a pressing need for systemic change to ensure that everyone has access to the tools and knowledge necessary to level the financial playing field.
Policymakers and educators must recognise the importance of financial education and work towards making it a mandatory part of the school curriculum.
By equipping individuals with the knowledge and skills to manage their finances effectively, we can lift thousands of people out of poverty and help thousands more realise their financial dreams.
The question is: What are we waiting for?
Sources:
Bruegel: https://www.bruegel.org/policy-brief/state-financial-knowledge-european-union
IFAC: https://www.ifac.org/knowledge-gateway/discussion/cost-financial-illiteracy
You Might Also Like

Latest Article
Simon Caruana on Mekanika’s Role in Shaping Malta’s Industrial and Sustainable Future
Mekanika has long been a pillar of Malta’s industrial sector, but under the leadership of General Manager Simon Caruana, it has grown into a dynamic force driving innovation, sustainability, and operational excellence. In an insightful conversation with MeetInc, Caruana delved into Mekanika’s evolution, the challenges and opportunities within the Maltese market, and the company’s role … Continued
|
7 February 2025
Written by Patrick Debattista

KanonGaming Strategic Exit from the Swedish Casino Market with Sale of Four Brands to PAF
|
7 February 2025
Written by Hailey Borg

Watch: Choosing The Right Partners, Changes In The Sector And Innovation – Meet The People Behind The Business In Meetinc’s Latest Interviews
|
5 February 2025
Written by Hailey Borg