It is primarily the family that enables young people to manage money responsibly and make informed financial decisions. In fact, the family environment is a decisive factor in developing financial literacy among youth, influencing their knowledge and economic behaviors, as revealed in one of the in-depth analyses in the Edufin Index 2024.
The new generations, particularly Generation Z and Millennials, exhibit higher levels of financial socialization within the family compared to Baby Boomers. However, the overall financial literacy level of 18- to 24-year-old Italians is not only insufficient, but also lower than any other age group, primarily due to limited knowledge. This cohort stands at 50 on a 0-100 scale, where 60 represents sufficiency on the Edufin Index, a measure of financial and insurance literacy developed by SDA Bocconi in collaboration with Alleanza Assicurazioni and Fondazione Gasbarri. The Awareness component, which measures financial knowledge, is 46.8, while the Behavioral component, assessing the ability to make conscientious, responsible financial decisions, is 53.2.
Gender differences are also apparent among young people, although they are gradually narrowing. Girls tend to discuss family expenses more frequently, while boys show greater interest in investment-related topics. More significantly, girls are more often reimbursed for expenses “as needed,” a less educational approach compared to receiving a regular allowance, more common among boys, which encourages responsible money management.
The section of the Edufin Index 2024 dedicated to 18- to24-year-olds aims to understand how financial literacy develops in youth and what role the family plays in this process. The study builds on a long-standing tradition of research highlighting the correlation between family education and financial literacy. However, a specific tool to systematically measure financial socialization among young Italians was missing.
The main questions the study sought to answer are:
The research used an innovative financial socialization indicator to measure the degree of family influence in transmitting financial skills. There are three dimensions based on actions taken by parents: financial behavior models, explicit teaching, and experiential teaching.
To provide perspective, questions about financial socialization were also posed to older generations, asking them to recall how their families interacted with them during their youth.
The analysis showed that Generation Z and Millennials scored considerably higher than Baby Boomers, primarily due to greater reliance on explicit parental teaching. The correlation between financial socialization and financial literacy is positive, albeit moderate, while experiential teaching shows a deeper impact. Practical experiences, such as managing a personal budget or receiving money on a regular basis, proved crucial for developing financial skills.
A noteworthy finding is that, despite only 40% of Generation Z youth reporting frequent discussions about economic matters with their parents, this represents a marked improvement compared to previous generations. Baby Boomers, for instance, discussed such topics far less often in the family, limiting conversations mainly to daily expenses.
The methods parents use to give money to their children have also evolved over time. While a significant percentage of people in older generations did not receive a regular allowance when they were young, only 15% of Generation Z youth report receiving no money at all. However, the most common approach is still providing money “as needed.”
The study confirms that parents’ education levels appreciably affect their children’s financial literacy. As a result, this skill is particularly low among NEETs (Not in Employment, Education, or Training—a condition affecting 15% of the sample, especially children of less-educated parents). This cohort has a score of 46, dropping to 43 among female NEETs due to the gender differences described in a previous article in this series.
These findings highlight the need to promote financial education in school curricula, starting by improving the financial literacy of teachers, who currently do not feel fully competent or qualified for this task. For families, greater involvement in their children’s financial education is recommended. For example, structuring monetary support as a regular allowance could encourage planned resource management and foster responsible financial habits.
The SDA Bocconi faculty members involved in the creation of the EDUFIN INDEX 3° EDIZIONE Consapevolezza e comportamenti finanziari e assicurativi degli italiani (EDUFIN INDEX 3rd EDITION Financial and Insurance Literacy of Italians: Awareness and Behavior) report include Barbara Alemanni, Paola Castelli, Umberto Filotto, Gennaro De Novellis and Alessandro Recla.
Read other articles in the Edufin Index 2024 series:
Alemanni - Why Italians' financial literacy still falls short
Alemanni - Women and finance: The reasons behind a difficult relationship
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