Financial literacy, personal financial situation, and mental health among young adults in Sweden

Abstract

Financial literacy is today globally recognized as an essential life skill. However, many young adults have large debts due to consumption loans, and the situation in Sweden is escalating. Previous research has indicated a low financial literacy, and that the prevalence of mental illness is high within the group. In this report, we studied financial literacy, personal financial situation, and self-reported mental illness in a Swedish sample, comprising 2 057 respondents between 18 and 29 years. Our main findings indicate that financial literacy is lower than has previously been described, especially concerning knowledge about inflation. One in four reported they had consumption loans, one in three had loans to relatives, almost half of the respondents had perceived financial difficulties during the past year, and one out of ten had turned to the budget and debt advisor to receive help. Women showed lower financial literacy compared to men, indicating an important gender aspect. Our findings per se are sounding the alarm for policymakers to immediately pay attention in order to prevent the risk of becoming overindebted early in life. The present study highlights the urgent need to further study the complex relationship between financial literacy, personal financial situation, and mental illness among young adults.