Financial Literacy: Challenges for Intergenerational Students

“Working with students every day shows that the change is obvious. It is difficult to single out one reason for the changed image of the student. I think that this is largely influenced by the gradually improving financial literacy of students: students start working earlier, are interested in short-term and long-term investments, and take a long-term perspective when planning their finances.

Last year, a study conducted together with other experts from Vilnius College (VIKO) showed that now the financial literacy of young people is about 10% better, compared to what it was 5 years ago,” says Dr. Irena Danilevičienė, head of the Department of Accounting, VIKO, associate professor.

The teacher remembers that 10 years ago, students who came from schools to higher education institutions tried to give all their strength to their studies: “They usually started working only after completing their bachelor’s studies or in their last year. They knew that after graduation, they would be able to find a job in their specialty. Therefore, they did not pay much attention to acquiring financial management knowledge and improving these skills.”

Today, according to Dr. I. Danilevičienės, the situation is completely different. Students start working already in the first year. “Due to changed living conditions, students already during their studies have the need to pay for their own living – food, housing rent, etc. It is not uncommon for them to have no other option but to work if they want to support themselves and be independent. Therefore, from an early age, most future students are taught useful financial management skills by their parents, so that they can properly distribute and control their expenses and earned money in the future,” the teacher is convinced.

Students say that food, rent, clothes and, of course, entertainment require the most expenses per month. Wallets also have to be thinned from time to time in order to buy a new phone or computer, with which it would be more convenient not only to study, but also to work.

“The incentive scholarship for good grades currently amounts to approximately 80 euros per month. Although it’s fun to get it, you obviously won’t be able to make a living from it. That’s why we have to look for additional ways to earn or save,” says Grantas, a second-year student studying finance at VIKO.

In addition, dr. I.Danilevičienė notices that the level of financial literacy of students has changed significantly over the last 10 years and due to the strongly changed circumstances: “There was a pandemic, the price level, inflation, and the specifics of the work were changing, so many students were simply forced to look for ways to gain more knowledge about financial management options: saving, investing, accumulating, lending, etc.”

According to the teacher, students today not only start working earlier and manage their finances, but also invest or create their own businesses. “One of the events that made me understand that modern students look at finance differently was a meeting of students with invited guests from the business world that took place at the college. During it, young people actively inquired about the possibilities of applying investment and peer-to-peer lending platforms in practice. They were interested in how non-traditional methods could generate financial returns. 10 years ago, students really didn’t ask such questions,” the teacher shares her experience. Currently, students studying in the second year of the VIKO finance study program say that they are very interested not only in how to get a well-paid job, but also in acquiring knowledge that will allow them to choose the most suitable investment instruments in the future.

Student Rugilė says that she has already purchased bonds, and also has ambitious plans for the future: “I am currently saving for my first apartment in Vilnius. When you look at the current rental prices, you don’t want to pay someone else your money. Better to invest and buy your own home. If in the future fate decides that I will not live in it myself, it will always be available for rent or sale.”

She is seconded by Grant, who claims that in the future he is definitely considering not limiting his income to just his salary – he will seek to get additional financial returns by investing in shares or bonds.

“I have been interested in various possible investment instruments since my first year of study. In the future, I would like to use them effectively and thus increase my income. It’s true, I know that before that it would be worthwhile to acquire more knowledge in the field of financial literacy. That’s why I chose finance studies at VIKO”, says Grant.

That the image of the student has changed over the decade, according to dr. I. Danilevičienės, also shows the fact that almost every year there are students who successfully start their own business.

“Analyzing the data of the 5-year period shows that every year about 5-10 percent young people start working independently and create their own businesses. Young people increasingly want to take care of their future so that they don’t run out of funds to pay taxes, save or invest. 10 years ago, these were certainly not common cases, so it is very gratifying that over time, young people are actively interested in opportunities to invest money in meeting their future needs and are establishing businesses themselves.”

You can find more information about studies at the Faculty of Economics at Vilnius College: https://ekf.viko.lt/stojantisiems/studiju-programos/