Personal finance and financial literacy: Part 3 questions and answers

I believe modern consumer culture plays a huge role in this. People are constantly bombarded with targeted adverts that encourage instant gratification and impulse buying. For instance, fast-fashion retailers push discounted items so relentlessly that individuals frequently spend small sums without noticing the overall total. That said, stagnant wages relative to the rising cost of housing also leave many low earners with almost no disposable income left to put aside, regardless of how disciplined they try to be.

Generally speaking, older generations tend to be more risk-averse, prioritising property ownership, savings accounts, and long-term pensions. In contrast, younger adults often allocate a higher proportion of their earnings to experiences, such as dining out or travelling, partly because high property prices make saving for a mortgage feel unobtainable. However, it is worth noting that many young people are becoming increasingly financially savvy through digital investment apps, so this divide is not entirely straightforward.

Several global and domestic pressures have driven inflation upward. Geopolitical tensions and supply chain disruptions have pushed up the prices of essential commodities like energy and grain. For example, higher wholesale gas costs immediately filter through to domestic electricity bills and transport fares. However, while global trade bottlenecks are a major catalyst, domestic economic policies and housing shortages also dictate how severely citizens in different countries feel the pinch.

It seems very likely that many societies will become almost completely cashless within the next couple of decades. Contactless payments and mobile digital wallets offer unmatched convenience and speed for both consumers and merchants. You rarely see people queuing at cash dispensers nowadays in major cities. Nevertheless, completely phasing out physical banknotes could marginalise elderly citizens or those without reliable access to digital banking, so governments may need to retain physical currency as a backup.

In my view, teaching financial literacy in schools should definitely be compulsory. A lot of young adults leave education without grasping basic concepts like compound interest, taxation, or how credit scores operate, which often leads to poor borrowing decisions later in life. Having structured lessons on budgeting would empower pupils to make sound financial choices. Nevertheless, the syllabus would need to be practical and relatable, rather than purely theoretical, to have any meaningful impact.