Empowering the Future: Why Financial Literacy Matters for Pakistan’s Youth

Pakistan is a lower-middle-income country as classified by the World Bank and its under-30 population constitutes a massive 66.6%, out of a total of 241.5 million. These young people are in need of a secure future so that their potential can be turned into meaningful economic contributions. If the youth have to lead the country in an interconnected world driven by innovation and digital economies, the most important thing for them to learn is financial literacy and to understand the basics of savings and investments.

Current State of Financial Literacy in Pakistan

Financial literacy is defined by Investopedia as “the set of skills needed to handle money wisely, invest effectively, and plan for a comfortable future.” We will first start by looking at the financial and savings habits and behaviours of our nation.

Pakistan has an abysmally low savings rate of just 6.3% (2024), which is not only the lowest in the region but also globally. It lags behind regional peers such as India (30.7%), Bangladesh (30.4%), Nepal (35.6%), China (44.3%), and Iran (26.4%), as well as other countries from across the globe, such as Qatar (66.3%), Ireland (58.8%), Singapore (47.5%) and Germany (29.6%).

According to the Global Findex Database 2021 by the World Bank, Pakistan has a huge unbanked adult population with an estimated 115 million unbanked adults. The female unbanked population in Pakistan is approximately 13%. For example, more than four out of five unbanked adults said they could not use an account at a financial institution without help,

The number of retail investors in Pakistan is also very low if we go by the data available from the National Clearing Company of Pakistan Limited (NCCPL). The latest data says that, as of 31^st May 2025, there are only 353,912 active UINs (Unique Identification Numbers) in the Pakistan Stock Exchange (PSX).

Even though the number of new account openings is increasing every month, this is a worrisome trend. The stock market is seen as a wealth creation machine and is historically said to outperform other asset classes, such as gold, fixed deposits, in the long term. It is also useful to earn passive income in the form of dividends. If you own a few shares of a blue-chip company, such as MEBL, MARI or Apple, Google, your investment will grow if the company continues to grow in the long run.

Pakistan lags far behind other notable countries in this regard as well. Its neighbour, India, has 115 million investors in their stock market (8.2% of its population), China has 220 million investors (15.7% of its population), and the USA has 150 million investors (45% of its population). This shows that Pakistan has a very long way to go before it comes anywhere near its global peers.  

Importance of Financial Literacy for Youth

The country has been in a turbulent economic situation for the last few years. The gross domestic product (GDP) growth rate was -0.21% in 2022-23, and has slightly improved to 2.5% in 2023-24 and 2.7% in 2024-25 according to news reports. Pakistan has recently seen an annual inflation of 38% in May 2023, the highest it has been in recent years. It also has a significant young population unemployed, with official numbers saying that the unemployment rate is at 6.3% and around 44.9% job seekers aged 15-24 are out of work.

Due to this severe economic stress and unemployment, the youth face massive financial pressure on how to build their careers and invest in their future. Jobs are hard to find, raising capital for businesses is difficult, and the general pessimism is increasing the brain drain from Pakistan. As stated above, Pakistan has a low savings rate, and the majority population suffers from financial illiteracy. Hence, it is imperative to educate the masses at an early age about the benefits of savings and investments.

Here, I will give a few examples from developed nations that have added financial literacy and personal finance courses to their curriculum. Pakistan can learn from these nations’ examples and incorporate financial literacy-related concepts in its curricula. 36 American states require high school students to take a personal finance course or some form of financial literacy course. Some of the requirements vary from state to state, with some states integrating financial literacy into existing courses such as economics.

Singapore’s Ministry of Education (MOE) teaches financial literacy in school curricula at all levels, including primary, secondary, A-levels, and university, through character and citizenship education (CCE) lessons. It also has a long-running program on financial literacy since 20023 called MoneySense. The Australian curriculum includes financial literacy in mathematics and economics for grades 7-10. It covers key topics such as budgeting, stock market simulations and investing basics. The Canadian state of Ontario has introduced a new financial literacy course for grade 10 math students. It teaches the basics of investing, savings and future financial planning. The United Kingdom (UK), which includes England, Scotland, Wales, and Northern Ireland, teaches financial literacy in primary and secondary schools’ curriculum as part of citizenship and maths lessons.

Key Areas to Focus on for Gen Z

A few areas are of core importance once one begins their investing or savings journey.

Budgeting and Money Management

Learning the difference between income (what you earn) and expenses (what you spend) is a fundamental point to start from. Creating a monthly/quarterly/annual budget to keep track of your income and expenses so that you can learn to live within your means. Another important concept of money management is an emergency fund. This fund is vital to set aside money for a 3-6 month cover for unexpected events (health emergencies, car repairs, etc.)

Savings

Savings are an integral part of financial literacy understanding. They are important to understand the need for future goals, such as buying a house, your child’s education, or retirement. There are different types of savings accounts, for example, fixed deposits, high-interest savings.

Investments

Investments are different from savings since they are meant for wealth creation over time, and savings are meant as a safety net. There are different types of investments, such as stocks, bonds, real estate, mutual funds and ETFs, cryptocurrency, and gold, among others. All investment types, excluding cryptocurrency, gold, and real estate, are available in conventional and Shariah-compliant options. Every investment type or asset class has a different annual return, which can be easily searched on the web.

Financial Independence/Retire Early (FIRE)

A concept which is gained a lot of traction in the past few years is FIRE (Financial Independence/Retire Early). The FIRE movement, as it is known, encourages achieving financial independence before the age of conventional retirement. This is done by investing in a diversified portfolio of stocks, mutual funds, and real estate, among others, rather than relying on a traditional 9-5 job. More information on this concept can be gained from Reddit’s r/financialindependence subreddit and numerous YouTube channels dedicated to FIRE.

Gen Z understands technology better than the previous generation. Several new FinTech apps and digital banking services are making it easy for the youth to invest and save. Apps such as Easypaisa, JazzCash, SadayPay, and NayaPay act as a digital wallet, making it easier for the younger generation to make payments and transactions. Several brokerage firms, such as Finqalab and KTrade, are targeting youth for easy account opening in the PSX with highly sophisticated mobile apps.

Importance of Financial Education Initiatives

As stated above, it is highly important to introduce concepts of financial literacy in educational curricula from a young age. Only a handful of schools, colleges and universities in Pakistan, such as Beaconhouse School System, Roots International Schools & Colleges, Lahore University of Management Sciences (LUMS), National University of Sciences & Technology (NUST), Foundation of Advancement of Science and Technology National University of Computer and Emerging Sciences (FAST NUCES), and Institute of Business Administration (IBA), teach personal finance and financial literacy as part of a broader course on financial management, financial modelling, and fintech.

The government is playing its part in educating the youth from a young age about financial literacy. The National Institute of Banking and Finance (NIBAF), a fully owned subsidiary of the State Bank of Pakistan (SBP), is a premier institute on capacity development for bankers, micro and rural finance providers and other management professionals. It delivers national and international training programs, e-learning programs, and the National Financial Literacy Program for Youth (NFLP-Y).

NIBAF’s NFLP-Y program is imparting necessary financial education to school-going children and youth so that they can learn and understand money management skills and improve their understanding of financial matters, which will help them in their adult life. The NFLP-Y program is targeting three age groups, school-going children aged 9-12 years, adolescents aged 13-17 years, and youth aged 18-29 years across several districts of Pakistan. It aims to reach over 1.6 million children, adolescents, and youth through online and physical training sessions.

It has also launched an e-learning game called “PomPak – Learn to Earn.” This game is available on PC, the Play Store, and App Store. It is an engaging game designed to improve the money management skills of the youth and currently has over 500,000 downloads on the Play Store. NFPL-Y is a flagship program of the SBP but it needs to be scaled up so that more young people become financially literate and take control of their futures.

Conclusion

To sum it up, for a young nation like Pakistan, financial literacy should be made the cornerstone of all of our future efforts, including government and educational programs. This can help the young people to secure their futures and not rely on traditional jobs in a struggling economy. Investing early in different asset classes can help the youth build a large portfolio by the time they turn 30 or 40.

As Pakistan’s youth, it’s crucial that you take charge of your financial future today. Start learning, saving, and investing now to build a brighter tomorrow. I finish this article with a famous quote from a legendary investor, Warren Buffett, who says, “The real key to financial independence is finding a way to make money while you sleep.”

If you want to submit your articles and/or research papers, please visit the Submissions page.

To stay updated with the latest jobs, CSS news, internships, scholarships, and current affairs articles, join our Community Forum!

The views and opinions expressed in this article/paper are the author’s own and do not necessarily reflect the editorial position of Paradigm Shift.