Financial literacy and financial vulnerability: evidence from Hungary

Obádovics, Csilla and Zugor, Zsuzsanna and Kulcsár, László (2025) Financial literacy and financial vulnerability: evidence from Hungary. HUNGARIAN STATISTICAL REVIEW, 8 (2). pp. 111-134. ISSN 2630-9130

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Abstract

The study investigates the relationship between financial literacy and financial vulnerability among disadvantaged social groups. Between 2024 and 2025, service workers at child protection services in Fejér County asked 578 clients to complete a questionnaire about their economic, social, and lifestyle situations. The study, in relation to the existing literature, highlights that previous articles on financial literacy do not sufficiently consider the impact of different social, lifestyle, and cognitive factors; moreover, there are hardly any publications that examine the relationship between financial literacy and financial vulnerability in marginalized social groups. We examined financial literacy (knowledge, attitudes, behavior) in relation to the dimensions of financial vulnerability affecting households and individuals (vulnerable income situation, vulnerable welfare situation, and vulnerable labor market situation). The following results can be highlighted: 1. The knowledge dimension of financial literacy was only significantly related to educational attainment. 2. The irresponsible financial behavior dimension of financial literacy showed a significant relationship with labor market and financial vulnerability factors. 3. The financial pressure associated with meeting community expectations is stronger among those who are vulnerable in the labor market and in their financial situation. 4. The dimension of financial literacy related to negative attitudes toward banks was not significantly associated with any dimension of vulnerability. Our results showed that the correlation between financial literacy and financial vulnerability requires a differentiated approach. The dimensions of the two concepts are interconnected in various ways, depending on specific social and demographic factors. Previous research has largely neglected the examination of specific disadvantaged groups, which is necessary in the future if we want to better understand the correlations between financial literacy, financial vulnerability, and social and demographic characteristics.

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