Financially Savy Households as a Way of Smoohting Shocks in the Market Economy System

Abstract

We assume that strengthening consumers' position has far-reaching benefits, including better decision-making, improved services from financial intermediaries, and, ultimately, overall financial stability. Therefore, the paper's main goal is to discuss the most effective way to achieve satisfactory national standards in financial literacy to better anticipate and respond to economic shocks through household financial decisions. Using inductive and deductive research methods, we generate a hypothesis and test it by utilizing microdata from the Household Finance and Consumption Survey, implemented by the National Bank of Slovakia and coordinated by the European Central Bank. Our findings demonstrate the impact of an individual's education on their level of financial literacy and how it affects financial decisions. Ultimately, our research proposes concrete solutions to improve financial literacy and decision-making, and so enhance financial stability.