Is Vietnam financially literate enough?

May 3, 2023 | 04:00 pm PT
Hoang Anh Minh Journalist
When I was 6, my father gave me a tube made of bamboo. He made a hole on it, and told me to use it as a piggy bank.

He said if I put money in it instead of buying ice cream, I would have a larger amount of money to spend on something significant at the end of the year.

We were a poor family, so naturally I did not have a special source of income. When I finally split the tube apart at the end of the year, I used the money to buy a single firecracker. It was my first lesson in finance management, a lesson that I would quickly forget.

When I reached middle age, I saw people who became unhappy quickly after winning the lottery or gaining an inheritance. There were also those who never quite managed to escape poverty. They all had something in common: the inability to properly manage their finance.

Not everyone is good at managing their own money right off the bat. We 70s kids learned all kinds of things about literature and the sciences, and yet nothing about making and spending money. The only way we knew how to manage financial matters was either through inborn talents or via observation as we grew up.

In 1995, the $277 per year average income of Vietnamese people was ranked 9th out of 10 ASEAN member states. We have come a long way since then. In 2023, the IMF predicted Vietnam’s average GDP per capita would continue to rise, reaching around $4,682.

At this level of income and a population of over 100 million people, Vietnam became an active financial market. Once people no longer had to worry about bringing food to the table, they started to care more about services and other ways to improve their quality of life. And once people had enough wealth, financial management became all the more important.

A society where people manage their money well will surely function efficiently. In the opposite direction, a society in which people do not know how to make and spend money properly will make its population miserable. This kind of lack of money management skills often comes from greed and a shortage of knowledge.

Financial education is not merely about teaching people how to manage money, but also about an entire nation's financial literacy. This has a major effect on an economy.

To measure financial literacy, the Organization for Economic Cooperation and Development (OECD) uses three criteria: financial knowledge, behavior and attitude. An OECD report in 2016 revealed that Vietnam's financial literacy is at a much lower level than that of other high-income countries.

Basic knowledge and skills regarding financial management are a part of developed countries' education from very early on. But in Vietnam, such things are only taught starting at the university-level.

It is this lack of basic financial knowledge, as well as an inability to discern risks in investments, that has caused many people to lose money to insurance schemes and bonds in recent years.

Vietnam is working to improve its financial literacy through multiple initiatives, starting with education. A 2018 education program introduced an official financial education course to the general public for the first time. Second graders were taught how to differentiate different Vietnamese cash notes. Movements in this direction would surely equip my children's generation with better financial knowledge than we ever received in the past.

Just recently, the Vietnam Financial Consultant Association also launched a program for personal finance planning in order to improve community awareness. The long-term goal of the program is to provide financial counseling to regular people, and to train experts in personal finance management. Compared to the rest of the world, this initiative might have come a little bit late. But better late than never.

Being equipped with financial knowledge is something that everyone deserves.

*Hoang Anh Minh is a Vietnamese journalist.

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