Financial literacy of the population: Demographic features and opportunities for improve (In the case study of Vologda region)

Abstract

The article presents the results of the analysis of financial literacy in groups with different demographic characteristics (marital status, age, presence of children). The relevance of the study is explained, on the one hand, by the increase of the flexibility of family structures and multivariance of life scenarios, and, on the other hand, by the increase of a person’s private responsibility for the efficient management of funds and ensuring their own financial well-being. The purpose of the study is to determine the patterns of the relationship of financial literacy and demographic characteristics of the population, which together characterize the stages of the life cycle. It will make the development of practical recommendations for improving financial literacy in accordance with the specific life circumstances of the population possible. The informational framework of the research includes data of regular sociological surveys of the population of Vologda region, concerning the life standards and quality and conducted with the direct participation of the authors, and the selected data from nationwide sociological polls. The approach to the concept of financial literacy suggested by the Organization of economic cooperation and development has been substantiated. We have considered the results of financial literacy research including the studies that are based on the life-cycle hypothesis of consumption and savings that concern the relationship with the social and demographic features of the population. Characteristics of the available methods of assessing the financial literacy of the population have been distinguished. The sociological assessment method for two components of financial literacy (knowledge and skills) with the separation of three measured indicators (household budget, income distribution, comparison of financial services before buying them) has been used for the assessment of financial literacy rate in accordance to the accepted concept. We have revealed problem areas of the population of the case study region that are related to fragmentary consideration of income and costs; instability in savings formation and consumption priority; the skill to compare financial products before buying them is not highly distributed. The scientific novelty of the study is to reveal patterns of financial literacy alteration in accordance to the stages of the family life cycle, in particular the increase of self-assessment of financial literacy rate when passing from the initial stage of a family to its maturity and the decrease of self-assessment of financial literacy rate when a family stops existing; the prevalence of budgeting practices in families of older and middle-aged people; the positive impact of family status on the discipline in terms of accounting for income and expenses and in terms of comparing financial products before purchasing them. The practical novelty of the study concerns the recommendations on leveling the problems of financial literacy of the population, that have been formulated taking into account the identified demographic characteristics, which can be used by the authorities and other stakeholders. Awareness campaign on general financial issues, training in special budget applications are among the recommendations. The further stages of the study will be connected with the determination of particular indices of financial knowledge and skills in several subject areas (family budget, savings, lending, investment, taxes, insurance, financial security, etc.), and an integral financial literacy index. The latter will be included in the context of demographic groups mentioned above. It will allow us to work out tools for the improvement of the financial literacy of the population.