Financial literacy is crucial for young people as they encounter financial choices that can shape their futures. Decisions like investing in a college education, making purchases, or even buying a book or a computer game can carry long-term consequences. That’s why it is essential to explore the connection between the financial literacy levels of young people and their proficiency in information and communication technology (ICT), reading and mathematical literacy. To delve into this subject, we’ve gathered data from the 2018 PISA database, officially published by the Organisation for Economic Co-operation and Development (OECD, 2020).

ICT literacy

In the age of digitalisation, which has left its mark on the world over the past 20 years, one of the significant areas of impact has been educational reforms, with the focal point being information communication technologies. So, what is ICT literacy? In its most general definition, ICT literacy is the ability to use and handle information communication technologies (Rohatgi et al., 2016). Learning management systems such as Blackboard, Canvas and Moodle; Coursera, edX, Khan Academy and other massive open online course platforms; learning software such as virtual or augmented reality; and online assessments – all exemplify how ICT holds a crucial place in both teaching and learning processes.

Financial literacy

Financial literacy is typically defined as the combination of awareness, knowledge, skills, attitudes and behaviours necessary to make informed financial decisions and ultimately attain personal financial wellbeing (OECD, 2017). Lusardi (2015) contends that financial literacy is a crucial 21st-century skill for students, and schools are ideally positioned to nurture the essential skills and competencies required (Blue & Grootenboer, 2019, p. 2). Furthermore, Servon & Kaestner (2008) have demonstrated a significant correlation between individuals with low levels of financial literacy and low levels of ICT literacy. This suggests that being financially savvy goes hand in hand with being technologically adept, making these skills even more relevant in our increasingly digital world.

‘There is a significant correlation between individuals with low levels of financial literacy and low levels of ICT literacy, which suggests that being financially savvy goes hand in hand with being technologically adept, making these skills even more relevant in our increasingly digital world.’

Reading and mathematical literacy

A strong foundation in reading literacy has a profound impact on an individual’s proficiency in using information and communication technology, while an individual’s ICT competencies, in turn, influence their level of financial literacy. Reading literacy, as defined by the OECD (2020, p. 26), refers to an individual’s capacity to comprehend, utilise, evaluate, reflect upon and engage with various forms of text to attain personal goals, expand knowledge, unlock their potential and actively participate in society.

Mathematical literacy, on the other hand, pertains to a student’s ability to apply mathematical concepts, procedures, facts and tools to solve problems and gain insights into various phenomena across diverse contexts. It encompasses mathematical reasoning, which equips individuals with the capability to describe, explain and predict real-world situations (OECD, 2020, p. 26). As Huston (2010) suggests, struggling with basic arithmetic skills can significantly impact an individual’s level of financial literacy.

My recent study has revealed some fascinating insights that can guide our understanding of how these skills interact to shape financial literacy (Acar, 2023).

First and foremost, my research indicates that ICT competence, on its own, doesn’t have a strong direct impact on financial literacy. Instead, it is reading literacy that quietly plays a mediating role in this relationship. This means that a strong foundation in reading literacy can significantly influence one’s financial literacy when combined with ICT skills. Furthermore, mathematical literacy directly affects financial literacy, but it doesn’t act as a mediator between ICT competence and financial literacy. This underscores the unique and essential role that mathematical literacy plays in bolstering financial knowledge.

These findings highlight the intricate interplay of these skills and how they collectively shape the financial literacy of young individuals. It is evident that, in the digital age, possessing a range of skills is crucial for financial empowerment. This research accentuates the pivotal role of reading literacy in mediating the relationship between ICT competence and financial literacy, and underscores the significance of both mathematical and reading literacies in enhancing financial knowledge. These insights also emphasise the necessity for targeted digital literacy programmes.

To conclude, this blog post offers a blueprint for education administrators and policymakers. It suggests integrating financial and digital literacy into educational curricula, which can help bridge societal gaps and empower individuals in this digital era.

This blog post is based on the article ‘Breaking the cycle: The mediating effects of reading, mathematical and ICT literacy skills on financial success in youth’ by Tülin Otbiçer Acar, published in the Review of Education.

References

Acar, T. O. (2023). Breaking the cycle: The mediating effects of reading, mathematical and ICT literacy skills on financial success in youth. Review of Education, 11(3), e3421. https://doi.org/10.1002/rev3.3421  

Blue, L. E., & Grootenboer, P. (2019). A praxis approach to financial literacy education. Journal of Curriculum Studies, 51(5), 755–770. https://doi.org/10.1080/00220272.2019.1650115

Huston, S. (2010). Measuring financial literacy. Journal of Consumer Affairs, 44(2), 296–316. https://doi.org/10.1111/j.1745-6606.2010.01170.x

Lusardi, A. (2015). Financial literacy skills for the 21st century: Evidence from PISA. Journal Of Consumer Affairs, 49(3), 639–659. https://doi.org/10.1111/joca.12099

Organisation for Economic Co-operation and Development [OECD]. (2017). G20/OECD INFE report on adult financial literacy in G20 countries. http://www.oecd.org/daf/fin/financial-education/G20-OECD-INFE-report-adult-financial-literacy-in-G20-countries.pdf

Organisation for Economic Co-operation and Development [OECD]. (2020). PISA 2018 Results (Volume IV): Are students smart about money? https://doi.org/10.1787/48ebd1ba-en

Rohatgi, A., Scherer, R., & Hatlevik, O. E. (2016). The role of ICT self-efficacy as a mediator between students’ ICT use and their achievement in a computer and information literacy test. Computer & Education, 102, 103–116. https://doi.org/10.1016/j.compedu.2016.08.001

Servon, L., & Kaestner, R. (2008). Consumer financial literacy and the impact of online banking on the financial behavior of lower-income bank customers. The Journal of Consumer Affairs, 42(2), 271–305. https://doi.org/10.1111/j.1745-6606.2008.00108.x