Enhancing financial literacy in Hungary

-By INSME Secretariat

During the INSMEAcademy session held on the 24th of February 2020, László Balogh, Deputy State Secretary of Financial Policy Affairs at the Ministry of Finance in Hungary, discussed about the strategy embraced by the Hungarian government to enhance the financial education following the international best practices available in the OECD/INFE framework.

At the beginning of his speech, Mr Balogh mentioned the issues for the population ensued from the lack of financial knowledge and experience and, on the other hand, the importance to develop self-defence capabilities and skills to deal with savings, family budget, taxation and make responsible decisions by evaluating all the risks.

In this regard, the Hungarian Government set the goal of increasing the citizens’ financial literacy to raise the awareness in financial decisions, by implementing a seven years strategy. This strategy has been launched in 2017 and it breaks down its practical implementation into two years consecutive action plan.

The strategy has been implemented in 2018 an consists of 7 targets:

  1. create a framework to disseminate and enlarge the financial education in public education system;
  2. strengthen the basics of conscious financial behaviour and the resilience of households to financial stress;
  3. create an attitude that fosters prudent financial decisions, and the role of institutions and infrastructures in supporting conscious financial consumer behaviour;
  4. strengthen the attitude for long term financial planning in order to spur consumers to start thinking in their youth to long term financial needs;
  5. increase the access to financial products and basics services (financial inclusion), since 10% of the Hungarian population seems to be extremely limited in this regard;
  6. promote the wider use of modern cashless payment instruments;
  7. support prudent borrowing.

Every second year, the government will use indicators to measures what has been already reached in order to stretch the strategy, strengthen the areas were the performance was weak and give less emphasis were the performance was much higher than the target. Mr Balogh stressed the importance of this two years consecutive action plan since the efficiency of the programmes needs to be regularly surveyed with appropriate instruments in order to review its implementation.

After analysing the objects of this strategy, Mr Balogh talked about the target groups and how to reach them to achieve more efficient results.

The most common priority target group includes students, teachers and trainers. Another group is composed by young people, new entrants to the labour market and first homeowner. The more exposed to risks and possibilities of scam is the pensioners group while the Working age group should be the healthier one.

The main point of this strategy is assuming that financial skills can be taught within the framework of optional subjects and as part of mathematics, civil, historical and geographical topics.

That said, Mr Balogh pointed out the relevant role of the teachers in this process and gave an overview of the training programmes the Hungarian government is carrying out in order to implement the Smart Finance strategy. The programmes are officially accredited and consists in 30 hours financial and economic training, for primary and secondary school teachers, that will allow them to teach this subject and will let them gain credit points. Since 2015 more than 2430 teachers have attended these training programmes so far.

In technical secondary school, financial education topics became mandatory, due to the connection between the development of financial competencies of the growing generation and the expansion of entrepreneurial skills. Since business cannot work without financial know-how, the young generation will be encouraged to develop their own entrepreneur point of view.

Mr Balogh highlighted also the importance of a pilot project, besides the teaching programmes, which states that all the financial transactions in this environment should be made through cashless payments (cafeteria, class contributions, text books, purchases, etc) This project involves 500 Hungarian schools, a total of 1200 students and it has been supported also by magazines for students, where the Ministry of Finance publishes financial related article every month.

Another relevant initiative taking place in school is the Financial Test, the students affected are aged between 14 to 20 years old for a total of more than 11.500 participants. This very successful initiative is co-financed with the Money Compass Foundation, Association of Insurance Companies and Student Loan Centre.

Another ground for improving the knowledge and the use of financial tools are the mobile devices.

The “Financial Hero Training”, is an educational game that enables pupils of classes 7 and 8, as well as their teachers, to gain high standard financial knowledge presenting real challenges and providing excellent examples of experience-based learning.

In 2015, Hungarian Ministry of Education joined the European initiative, Money Week, a great success that reached over 205.000 pupils/year which applied the “learning by doing” principle. In 2019 the Hungarian Money Week and the organising institutions were nominated for the Global Money Week Excellence Award, the annual financial awareness campaign to help children and young people to learn about money matters and entrepreneurship organised by the OECD International Network on Financial Education (OECD/INFE).

The Money Week in Hungary gathered over 700 volunteers, experts in the financial field from banks, ministries and enterprises while the learning material was developed by teachers using interactive elements.

Regarding the higher education, in 2017 has been established the FINTELLIGENCE, Financial Literacy Centre that is now present in 4 university centres (Miskolc, Debrecen, Pécs and Budapest) with the goals to develop financial literacy and business culture using modern technologies and digital channels. These smart classrooms are also open for secondary school students on demand.

Finally, Mr Balogh remarked that the Hungarian ministry of Finance established an award, that will take place for the first time in 2020 and will reward pupils and students, teachers and schools that contributed to enhancing the financial literacy the most, based on the proposal of the management bodies, directors and parents’ associations of the schools.

That said, Mr Balogh stressed the utility of the special government web page created more than one year ago (https://www.okosanapenzzel.hu/) where it is possible to find news, practical examples on how to take financial decisions, learning materials from the OECD and games.

At the end of his speech, since the success of all the initiatives pitched in the Smart Financing framework, Mr Balogh enlightened the space for improvements of the strategy:

  • financial literacy must be further spread promoting educational events and financial exhibitions, as well as the development of appropriate training materials;
  • digital finance solution (i.e. FinTech) will increase their importance in the next few years and financial capability and consumers’ self-defence capacity will gain importance;
  • the wider availability of mobile phone applications will offer convenient, fast and cheap opportunities to purchase financial services;
  • the strengthening of the financial education within and outside formal school education;
  • information campaigns to be further planned and implemented;
  • the top priority of bringing up a financial literate generation.

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