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Improving financial literacy among Gen-Z in Indonesia
While there have been efforts to integrate financial literacy into the school curriculum, these are often limited and not sufficiently practical.
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Financial literacy skills have declined for all Americans in the past decade, most noticeably for those ages 18 to 34, according to a recent Finra study. (Shutterstock/Tashatuvango)
A
s Generation Z (Gen-Z, those born between 1997 and 2012) in Indonesia enter adulthood, a unique financial challenge in an increasingly digital and complex financial environment will be encountered. Despite being the most digitally connected generation, many young Indonesians struggle with financial literacy, which is a crucial aspect in making informed financial decisions.
Gen-Z in Indonesia faces several financial literacy challenges. One of the main challenges is the low level of financial literacy.
Based on a survey by the Financial Services Authority (OJK) and Statistics Indonesia (BPS) in 2024, the 15-17-year-old age group included in Gen-Z has the lowest financial literacy index, 51.7 percent, far below the financial literacy index of the other 65.43 percent of the population. This figure shows that many of them do not have adequate understanding of how to manage personal finances.
The problem's root lies in the lack of a comprehensive financial education within the formal school system. While there have been efforts to integrate financial literacy into the school curriculum, these are often limited and not sufficiently practical, leaving many young people unprepared to manage their finances effectively. Without a strong foundation in financial literacy, individuals are more likely to make poor financial decisions.
Furthermore, Gen-Zers are heavily influenced by digital culture, where social media platforms often promote consumerism and a lifestyle of instant gratification. A study by McKinsey & Company (2023) highlights that young Indonesians are highly influenced by online trends and peer pressure, leading to impulsive spending behavior and a lack of long-term financial planning.
The prevalence of "buy now, pay later" schemes and easy access to credit through digital platforms further exacerbates this issue, as many young people do not fully understand the implications of these financial products. Moreover, the COVID-19 pandemic has led to high youth unemployment rates and job insecurity, making financial planning more critical yet more difficult for young people.
According to a report by the Asian Development Bank (2022), the economic uncertainty has made it harder for young Indonesians to save and invest, as many are focused on immediate financial survival rather than long-term wealth building.
