FINANCIAL LITERACY: PILLAR OF FINANCIAL WELFARE OF INDONESIAN SOCIETY

Financial literacy is an individual's ability to understand and manage financial aspects in everyday life.

sofyanto

5/17/2025 06:17:00 am

Indonesia's Financial Literacy Index

Based on the 2024 National Survey of Financial Literacy and Inclusion (SNLIK) conducted by the Financial Services Authority (OJK) and the Central Statistics Agency (BPS), Indonesia's financial literacy index was recorded at 65.43%.

This figure shows a significant increase compared to 2022 which only reached 49.68%.

This increase reflects a higher public awareness of the importance of good financial management.

However, the figure also shows that there are still challenges in ensuring that all levels of society have adequate understanding of finance.

Factors Affecting Financial Literacy

1. Age and Education

The age group between 26-35 years has the highest financial literacy index, which is 74.82%, followed by the age group between 36-50 years (71.72%) and finally the age group between 18-25 years (70.19%).

In contrast, the age groups 15-17 years and 51-79 years have the lowest financial literacy index, respectively 51.70% and 52.51%.

In terms of education, college graduates have a financial literacy index of 90.63%, while those who did not graduate from elementary school only reached 43.20%. This shows that a higher level of education contributes significantly to better financial understanding.

2. Gender

Based on gender, the male financial literacy index is slightly higher than that of women, at 67.53% and 65.73% respectively.

However, this difference is not too significant and shows that financial literacy needs to be improved evenly across all groups.

3. Geographical Location

The level of financial literacy in urban areas was recorded at 70.89%, higher than in rural areas which only reached 59.60%.

The difference in these figures shows that access to financial information and services in urban areas is much better when compared to rural areas.

Impact of Financial Literacy on Economic Behavior

Low levels of financial literacy can have a negative impact on people's economic behavior.

A study in DKI Jakarta showed that the millennial generation with a financial literacy rate of 50% and financial inclusion of 60% had less than optimal savings and investment behavior.

Conversely, individuals with good financial literacy tend to have more positive economic behavior, such as saving regularly, investing, and planning finances for the future.

This shows that increasing financial literacy can encourage more productive and sustainable economic behavior.

Efforts to Increase Financial Literacy

1. Education and Socialization

Based on gender, the male financial literacy index is slightly higher than that of women, at 67.53% and 65.73% respectively.

However, this difference is not too significant and shows that financial literacy needs to be improved evenly across all groups.

3. Geographical Location

The level of financial literacy in urban areas was recorded at 70.89%, higher than in rural areas which only reached 59.60%.

The difference in these figures shows that access to financial information and services in urban areas is much better when compared to rural areas.

Impact of Financial Literacy on Economic Behavior

Low levels of financial literacy can have a negative impact on people's economic behavior.

A study in DKI Jakarta showed that the millennial generation with a financial literacy rate of 50% and financial inclusion of 60% had less than optimal savings and investment behavior.

Conversely, individuals with good financial literacy tend to have more positive economic behavior, such as saving regularly, investing, and planning finances for the future.

This shows that increasing financial literacy can encourage more productive and sustainable economic behavior.

Efforts to Increase Financial Literacy

1. Education and Socialization

The government and financial institutions need to intensively educate and socialize about the importance of financial literacy. Programs such as seminars, workshops, and media campaigns can help the public understand the basic concepts of finance and how to manage personal finances wisely.

2. Integration of Education Curriculum

Including financial literacy material in the formal education curriculum can help equip the younger generation with financial knowledge from an early age. This will ultimately form a habit of how to manage finances well.

3. Utilization of Digital Technology

In the digital era, technology can be utilized to increase financial literacy. Mobile applications, online education platforms, and social media can be effective means of disseminating financial information and education to the wider community.

4. Collaboration Between Institutions

Collaboration between the government, financial institutions, and civil society organizations is very important in efforts to increase financial literacy. This collaboration can create more effective programs that reach various levels of society.

Future Prospects

With the increase in the financial literacy index from 49.68% in 2022 to 65.43% in 2024, there is positive hope for the future of financial literacy in Indonesia. However, challenges still exist, especially in reaching groups of people with low literacy levels.

Through joint efforts from various parties, it is hoped that financial literacy in Indonesia can continue to increase, so that people can manage their finances better and achieve sustainable financial well-being.

Conclusion

Being financially literate is important in this era of uncertainty. The younger generation needs to be taught from an early age so that they can later manage their finances properly and correctly and ultimately provide added value to welfare.