Low-Credit and Low-Income Policy Users of Public Finance "Urgent Need for Financial Knowledge"

Financial Life Difficulties Cited as Background
81.7% of Respondents Say "Financial Education Needed"

[Asia Economy Reporter Minwoo Lee] A significant number of policy low-credit and low-income users of financial services cited a lack of financial knowledge as the background for their financial difficulties. There is an analysis that financial education targeting these groups is urgently needed.

On the 15th, the Korea Inclusive Finance Agency announced that it analyzed the necessity and effectiveness of financial education for 1,038 policy low-income financial service users last year (523 who completed financial education and 515 who did not) in collaboration with the Korea Development Institute (KDI), resulting in these findings.

In the analysis of the necessity of financial education conducted on 515 non-attendees, 81.7% of respondents answered that financial education is necessary. This is an increase of 6.5 percentage points (p) compared to the previous year. The causes of financial difficulties were answered in order as difficult household economic environment (48.0%) and lack of financial knowledge (36.8%). It is analyzed that low-income financial service users feel the necessity of financial education.

The effectiveness analysis conducted on all respondents showed that those who attended financial education responded more skillfully to financial problems and experienced positive changes in their financial lives compared to non-attendees. Additionally, they had a lower ratio of excessive spending relative to income and used low-interest loan products from first-tier financial institutions (banks), indicating healthier financial behavior than non-attendees.

When analyzing the areas where financial education is needed, there was a high demand for education related to credit management, inclusive financial systems, and financial fraud prevention, which are directly connected to personal financial life. As for educational methods, online education was preferred by over 70% across all age groups. People in their 20s preferred ‘using online portals (20.6%)’, while those in their 60s preferred audiovisual media (TV, radio).

Meanwhile, the Korea Inclusive Finance Agency continues to expand financial education for low-income and vulnerable groups. Last year, it provided financial education to 429,126 low-income and vulnerable individuals, an increase of 57.9% compared to the previous year.

This year, reflecting the analysis results, the agency plans to strengthen information provision functions using online portals for young people and provide practical, case-centered financial education closely related to actual financial life to enhance effectiveness. In particular, it plans to actively utilize case-based experiential teaching materials for seniors to improve educational effects. The needs of users will also be reflected in the recommendation algorithm for educational videos on the agency’s financial education portal to provide more sophisticated, customized financial education.

Those wishing to receive financial education can apply through the Korea Inclusive Finance Agency’s financial education portal. Video education is also provided free of charge. Additionally, through the Financial Supervisory Service’s ‘e-Financial Education Center,’ information on financial education from 32 domestic financial education institutions can be accessed.

Lee Jaeyeon, head of the Korea Inclusive Finance Agency, said, “For policy low-income financial services to have a practical effect on stabilizing the financial lives of low-income and vulnerable groups, financial education must be accompanied.” He added, “We will continue to strive to ensure that no educational blind spots occur for low-income and vulnerable groups by providing effective financial education that reflects the real needs of users throughout their life cycle, rather than simple information provision.”

This content was produced with the assistance of AI translation services.