Most Dutch are too optimistic about their financial circumstances because they have insufficient knowledge about money matters, research commissioned by the Finance Ministry has shown.

 
The survey revealed that only 16 percent of Dutch households are expecting their financial situation to worsen over the next twelve months; 25 percent are expecting an improvement. Government-sponsored research platform CentiQ, which carried out the survey, thinks many people are overoptimistic because they fail to grasp the consequences of the global financial crisis. In actual fact, 25 percent of the Dutch saw their circumstances worsen over the past year.

 
Few people appear to be aware of the cost of an overdraft, nor do they know how much interest they have to pay over personal loans. The lack of insight is most evident among women, over-60s and the lower educated, the survey found.

Self-sufficiency
In all, 1400 Dutch adults were polled by CentiQ. The platform was set up in 2006 by the Ministry of Finance because "financial self-sufficiency is, to an increasing extent, becoming a basic precondition for independent functioning within an ever more complex society", CentiQ says on its website.

CentiQ has conducted a number of surveys since it was founded, which show that, in general, the Dutch can get by well to extremely well. But almost 10 percent (about 1.2 million people) regularly have no money left over at the end of the month. About 41 percent (just over 5 million people) are not prepared for a significant decrease in income or major expenditure, which can arise as result of important life events such as a divorce, job loss or change of job or a major accident or chronic illness.

Making it easier
CentiQ says that both parents/guardians and teachers should structurally devote more attention to dealing with money. But it also says that the providers of financial products need to do more to make it easier for consumers to make the right choices. The Dutch generally take an active attitude when it comes to choosing financial products. They like security, but do not readily trust advisers. People feel there are sufficient opportunities to obtain financial information, but are not willing to put in too much effort and generally have little interest in new financial products. Product information is often found to be unclear or too difficult.

Consumers with a short-term orientation are less able to get by and save, says CentiQ. So policy must be aimed at making these consumers more attentive to the long-term effects of financial behaviour. Information on financial products should be required to indicate what the effects could be if (for example) the interest rate rises, inflation increases, house prices fall or income declines. Consumers who by nature do not think of the future must be urged to also take into account the long-term effects.

Recommendations
Based on the findings in its various surveys, CentiQ recommends four types of policy measures:

1. Agenda setting: Popularise dealing with money smartly as a desirable and wise way to behave for consumers to achieve their goals. Role models and testimonials from personalities and opinion leaders can be used. The objective is to motivate people to think and talk about their financial behaviour and make them receptive to information about financial products like pension plans.
2. Education, training and raising consumers’ awareness so that they compare products more carefully and take financial decisions less impulsively. This also includes curricula for schools and adult education..
3. Market transparency: by imposing requirements on the information that providers of financial products provide, in particular information on the possible future effects of financial products. The objective is to provide people with relevant, clear and comparable information when purchasing and using financial products and in doing so diminish the complexity of such products.
4. Develop resources (intelligent agents, decision support systems) that can help consumers with financial decisions and guard them against financial mistakes. The objective is to ensure that a consumer’s total financial package is balanced in terms of risk and does not contain any omissions or overlap and also that financial decisions are supported by relevant analyses and comparisons.