It may be true that money doesn’t buy happiness. However, throughout our lives, it certainly shapes some of the most important choices we make: buying a house, raising a family, planning for retirement. Despite this, many of us only ever learn how to manage our finances through trial and (possibly quite a bit of) error. And yet, our ability to make sound financial decisions – on how we spend, save and plan for the future – has a big effect on our quality of life and overall wellbeing.
Moreover, even when people have knowledge, they often lack an easy access to the right tools and opportunities to invest for their future. That is why, under the savings and investments union, the Commission is working on two parallel tracks to help citizens take control of their finances and build wealth with confidence. On 30 September, the Commission presented a strategy to improve financial literacy at all stages of life, and introduced a blueprint for savings and investment accounts (SIAs) – a tool aimed at making investing simpler and more accessible for everyone.
Financial literacy
Financial literacy means having the knowledge and tools to feel confident when making financial decisions. It means knowing how to budget, how to protect yourself from fraud, how to avoid excessive debt, and how to make your savings grow over the long term.
However, levels of financial literacy in the EU are low – although figures vary significantly across Member States. According to the latest Eurobarometer survey, only 18% of EU citizens are highly financially literate. And some groups of people are more likely than others to be in a financially fragile situation – or even face financial exclusion. Women, for instance, often find that career breaks – and the pay gap – mean they have less savings. Low‑income families, meanwhile, are more vulnerable to financial setbacks. Older people may have trouble adapting to new technology, like digital banking, and are more likely to fall victim to scams. And migrants might struggle to understand the local financial system.
The Commission’s new strategy on financial literacy aims to support Europeans at every stage of life – from children learning about how money works at school, to people preparing for retirement. A basic understanding of concepts like interest rates, inflation or investment options can make the difference between financial insecurity and financial independence. The Commission’s strategy is based on four pillars (see graph below). The Commission will work with Member States and stakeholders to amplify ongoing efforts and increase financial literacy levels across the EU.
Savings and investment accounts
But financial know‑how is only part of the story. People also need concrete opportunities to put their savings to work. Europeans are big savers – and far too often, their money just sits in current or savings accounts, losing value to inflation. Frequently, they do this because it seems like the safer choice, and investing feels complex or risky. But when done wisely, over the medium and long term, investing can protect savings, make them grow and help people achieve their life goals. At the same time, the money invested helps finance European companies, fuelling innovation, job creation and growth. In an optimistic scenario, the Commission has estimated that greater retail participation in capital markets could increase the investment in EU assets by more than EUR 1.2 trillion over ten years.
The Commission’s savings and investment accounts work very much like a savings account, but with one important difference: they allow citizens to invest directly in shares, bonds or funds – starting with as little as €10 or the equivalent. SIAs are simple, transparent, and often come with tax benefits.
In some EU Member States, SIAs have already proved very successful. In other countries, they exist but lack the features or incentives to make them attractive. The Commission is recommending that Member States introduce SIAs where they do not yet exist and enhance existing frameworks by incorporating best practices from across Europe and worldwide.
Going forward, the Commission will work closely with Member States and stakeholders to implement the financial literacy strategy and monitor the take‑up of its Recommendation on a savings and investment account.
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