Young adults’ knowledge and understanding of personal finance in Germany: Interviews with experts and test-takers

Abstract

In recent years, the financial education of young adults has gained importance in Germany; however, very few valid test instruments to assess the knowledge and understanding of personal finance are suitable for use in Germany. In this article, we describe results of a survey in which experts in Germany in areas related to personal finance judged the relevance of the items of the American Council of Economic Education’s Test of Financial Literacy for use in Germany. Overall, they found the German version of the Test of Financial Literacy to be a valid instrument for assessing the knowledge and understanding of personal finance of young adults in Germany. Also, we conducted cognitive interviews with young adults in Germany to identify the sources of their knowledge of personal finance. Most of the participants claimed they gained a significant amount but not the majority of their knowledge and understanding of personal finance through formal school education. We conclude that personal finance should be addressed more thoroughly at secondary schools in Germany