Low financial literacy, accumulated private debt and limited digital skills are the main factors emerging in Organization for Economic Cooperation and Development (OECD) countries as a source of risk to household budgets, according to the new Consumer Finance Risk Monitor report. These are long-standing vulnerabilities for Greek households, while when combined with other factors, such as the increase in the cost of living and insufficient incomes, they put additional pressure on family budgets.
Financial illiteracy emerges as the most important demand-side risk across OECD countries (81%), which appears to directly affect consumers’ ability to make decisions about their finances. Recent surveys by the European Commission and the OECD consistently rank Greeks among the lowest in Europe in financial literacy, as they display limited understanding of financial terminology and little knowledge of economics. For example, the 2023 Eurobarometer showed that only 40% of Greeks managed to correctly answer questions about inflation, compound interest, risk diversification, risk-return concepts and the relationship between lending rates and bond prices.
The second most important risk for households (63% of countries) was high levels of private debt. In Greece, household debt as a percentage of disposable income is lower than in many advanced economies, but not negligible, at over 70%, according to the latest available OECD data. As the report also states, the current levels may be partly due to high unemployment rates during the crisis, which turned the world toward borrowing.
The third biggest threat to household incomes (44%) is considered to be low levels of digital skills. According to the OECD report, Greece has seen that consumers with limited digital understanding are at risk of becoming victims of financial fraud.
Notably, among the risks to budgets, 29% of OECD respondents single out insufficient income and 25% demographics, issues that are also long-term pressures for Greece.
Beyond demand-side risks, trade developments and tariffs, labor market conditions, and rising living costs are also weighing on household budgets, the OECD confirms. In Greece, housing is a disproportionate source of financial stress for households, with almost four in 10 Greeks spending more than 40% of their income on housing costs.