Financial literacy and Norway's youth

Experts call for more education in personal economy

12. december 2013 · No Comments · Artikel

New studies show poor results on young Norwegian people’s financial literacy. That calls for more education, experts cite. Norwegian government party, Høyre, disagrees 

Principle Jarle Ausland thinks it can be hard to teach children about personal finances because of their different relationships with money. “Some get pocket money and have chores and some get what they point at.”

Principle Jarle Ausland thinks it can be hard to teach children about personal finances because of their different relationships with money. “Some get pocket money and have chores and some get what they point at.” (Foto: Kirstine Dons Christensen)

By Kirstine Dons Christensen & Sidsel Hoe

It begins with exchanging marbles in the schoolyard. It moves on to pocket money, piggy banks and summer jobs. And suddenly it is serious business: Now it’s all about rent, interest rates and credit cards. However new evidence suggests that many young Norwegians are not ready to make that last leap and take their personal economy into adulthood.

Professor Ellen K. Nyhus is one of the authors of the new study titled “Financial Literacy in Norway”. She found that many young people did not understand the meaning of basic financial terms such as interest rate and inflation. Nyhus believes that more personal economy on the school agenda will help young Norwegians to become more financially literate.

“The school teaches all kinds of subjects: religion, geography and so on. But they don’t teach much about personal economy – and everyone will become consumers and need knowledge to face the financial market,” she says.

Need for schooling

Finance Norway, a federation for financial institutions such as banks and insurance companies in Norway agrees with Nyhus’ idea to bring more financial education into primary school. Last year they suggested adding an elective subject for primary school called “Practical personal economy”. Even though it did not go through Hilde Johansen from Finance Norway still hopes that personal finance will become mandatory in school as early as possible.

“Many children learn a lot at home, but not everyone. And some parents are not that good at personal economy themselves. To make sure that all children receive the right knowledge we think that they have to learn in school,” she says.

A survey carried out by YouGov for Danske Bank in 2012 shows that almost every fifth of the 300 young respondents aged 15-17 years do not know what will happen if the interest rate on a loan goes up. They either answered “don’t know” or that they would have “more money available”.


Social heritage is an issue
This year researcher for the National Institute for Consumer Research in Norway, Ragnhild Brusdal, conducted the study “Young adults and their personal finances”. She found that 84% of the respondents expressed a wish to learn more about personal finances in school. She therefore sees a clear opportunity for improvement in putting personal finances on the school schedule.

“Most of them get help from their parents. And of course that means that if their parents only know a little then they will only know a little. Then you are caught in a vicious circle you can’t break out of,” she says. In her study she found a difference between the different groups of respondents.

“Those who were students were a bit more careful with their money. They come from a background where their parents tutored them. The working group was slightly different. They didn’t have a lot of education and expressed a more casual attitude towards money.”

Responsibility of parents
The Norwegian school system has personal economy as a mandatory part of mathematics in the 10th grade. But Jarle Ausland, principle at Haumyrheia School in Kristiansand, states that the subject is a natural part of mathematics also in the early grades. For instance the students learn to set up a budget, calculate percentages, interests and so on.

When pupils finish primary school, would you say that they could go in to society and handle their own economy with what you have taught them?

“No. It is not sufficient to handle an adult economy,” says Jarle Ausland.

That however is not an incentive for the Norwegian government to change the level of education on personal finances. The governmental party Høyre believes that the amount of financial education in primary school is perfectly levelled at the moment.

”Too much emphasis on personal economy could remove focus from the basic abilities of reading, writing and calculating. To some extent economy is also a personal matter that is for parents to teach their children,” says Henrik Asheim member of the national parliament for Høyre and spokesperson on matters of primary school.

Controlling impulses pays off
At Haumyrheia School Jarle Ausland does not know whether more education in personal finances would help, as many of the pupils are still too young to take the subject seriously. However he remarks that the education in finances has another important purpose:

“Our job as a school is also to prepare them for independence and teach them about the values in our society. That job that starts early on – it takes a very long time,” he says. And according to Ellen K. Nyhus our attitude towards money determines the condition of our economy.

“It’s important to learn how to control one’s impulses when it comes to spending money. It’s like being on a diet. You know what the right thing to do is. But it’s a whole other situation when you are actually about to eat,” she says.

Listen to pupils Frederik and Ingebjørg tell you about their thoughts on finances.



Norway’s youth lacks knowledge of finances

12. december 2013 · No Comments · Artikel

Debt, budget and interest rates. New studies show that those are not words that occupy the thoughts of many young people in Norway. For the young Norwegians that provides a rough start on adult life

By Kirstine Dons Christensen & Sidsel Hoe


In the buzzing aula of the University of Agder in Norway, sit two young women, both in knitwear to resist the bitter cold of the Norwegian December. One of them is 22-year old Charlotte Helleland. As many other young Norwegians she cannot answer correctly when asked what an effective interest rate is.

“I’m not that interested in the subject. I know I learnt the meaning at some point but I don’t really remember,” she says.

Charlotte Helleland is far from being an unusual Norwegian 22-year old. Ellen K. Nyhus, professor at Agder University in Kristiansand, recently carried out a study, which showed that young people manage poorest in answering questions about finances.

To the questions in Ellen K. Nyhus’ test, Charlotte said: “They were hard to answer on the cuff! Even though I know I learnt them at some point.”

To the questions in Ellen K. Nyhus’ test, Charlotte said: “They were hard to answer on the cuff! Even though I know I learnt them at some point.” (Foto: Sidsel Hoe)

“Our survey showed that only half of the respondents know what nominal and effective interest rates are. And even fewer under 25 could answer. This is completely normal information, which is present in almost every contract for a loan. This must mean, that there is quite a few who agrees to a contract they do not understand,” she says.

Link: Can you answer the questions from the survey correctly? Try yourself here. 

Breeding future repercussions
The results of Nyhus’ study do not stand alone. A survey from 2010 by Danske Bank, distributed to people between 18 and 25 in Nordic countries showed that over half of young Norwegians have never made a budget. The same amount cannot identify the cheapest loan when presented with three options.


Numbers like these worry researcher Ragnhild Brusdal from the National Institute for Consumer Research in Norway. The results of her study “Young adults and their personal finances” from 2013 show that low knowledge on personal finances increases returning problems with paying your bills. Which in turn can have serious implications for your future.

Tone Bergene is a debt advisor for Kristiansand Municipality. She deals with serious cases of miskept finances. Listen to her experiences with the young people she meet in her job. 

“If the young people receive a payment remark, it can make it significantly harder to get a job and to establish a housing loan, which is essential in Norway,” Brusdal says and adds that every fourth person to receive a payment remark in Norway is under the age of 25. Ellen K. Nyhus agrees.

“It can also end up costing society a lot of money in terms of expenses to the legal system or in social workers to help with their economy,” she says.

It’s a jungle out there
Not only is the knowledge of personal finances small in Norway, the financial market has changed over the years. This is due to the several new loan types, which have emerged through recent years. These offer easy loans with interest costs that go to the roof. Among other experts, Ellen K. Nyhus points to the loans as a temptation nearly too big to resist.

“The financial market has developed in terms of an expansion of distribution channels. You can have expensive credit from many more channels than previously,” she says and exemplifies, “if you play wordfeud you are offered 50.000 in loan. You can borrow money all the time.”

Ellen K. Nyhus shares that concern with the Organisation for Economic Co-operation and Development (OECD), which in the recent years has put a strong focus on financial literacy among young people. Both agree that more knowledge is the way to help young people to a better financial understanding.

Parents help out
The OECD recommends that financial education is taught as early as possible in school and they refer to studies that show how financially literate people find less costly mortgages and avoid unnecessary costs of paying for high interest or other fees.

Back in the aula of the University of Agder, there is no doubt in the mind of Charlotte Helleland. She knows who to turn to when in doubt about finances.

“My father is my financial advisor,” she laughs. “I learn about finances along the way. And if I don’t understand my father will help me.”

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Charlotte Helleland does not feel completely ready to take up for example a housing loan. However she’s optimistic: “With help from my father and my bank manager I think I’ll be fine,” she says. (Foto: Sidsel Hoe)

It seems that Charlotte is not the only one, who turns to her parents, when in need of advice and help in the financial area. Research shows that 56% rely on their parents to help them in financial problems. Ellen K. Nyhus found out that only 3 % use the official website “Finansportalen” for help, a website created by the Norwegian Consumer Council to guide people on their finances.


The Norwegian curse
Being one of the richest countries in the world may influence the individual’s attitude towards money. Ragnhild Brusdal from the National Institute for Consumer Research in Norway has found that several of the young respondents claimed that the reason they did not worry about the state of their economy was that they were well taken care of in Norway.

“Faith in the public sector was rather big. It was somewhat astonishing, because the state can and will not just erase your debt if you end up in financial trouble,” says Ragnhild Brusdal. In her survey every fourth young respondent answered that they thought the public sector would help them, if they ended up in financial problems.

Charlotte Helleland can recognize this pattern even though she herself works in her spare time to save up money:

“Maybe we are a bit spoiled and just used to having enough money in Norway,” she says. Greeting us farewell she adds:

“Let’s just take it one day at a time and hopefully everything will be fine.”


Creditcards included in Norwegian curriculum

12. december 2013 · No Comments · Tophistorie

10th graders in Norway will from this fall on be taught specifically in the use of credit cards

By Kirstine Dons Christensen & Sidsel Hoe

This fall a new addition has been put on the Norwegian curriculum. The 10th graders in primary school are now to learn about the use of credit cards, informs The Norwegian Directorate for Education and Training.

Hilde E. Johansen from Finance Norway, a federation for financial institutions such as banks and insurance companies in Norway, greets the revision of the curriculum welcome.

“We see it has become more normal to use credit cards. If you don’t use it wisely it can be a way to mess up your economy. That is something the young people should know,” she says.

Researcher at the National Institute for Consumer Research in Norway Ragnhild Brusdal states that credit cards are becoming more common because banks are very willing to offer young people credit.

“Young people would do well with being more careful when receiving credit. It is a very heavy burden to start your adult life with debt” she says.

Debt advisor for Kristiansand Municipality Tone Bergene is not a fan of credit cards. Here is why.