Financial literacy gaps hold back Gen Z entrepreneurship

Generation Z may be highly ambitious, but a lack of financial literacy and accurate self-assessment of financial skills is holding back their entrepreneurial drive. A new study explores how knowledge alone is not enough: young people must also accurately evaluate their own abilities to translate interest into business action.

The research, titled “When Financial Awareness Meets Reality: Financial Literacy and Gen Z’s Entrepreneurship Interest” and published in the International Journal of Financial Studies, examines the links between financial literacy, self-perception, and entrepreneurial intent among Slovak students. It uses survey data from more than 400 young people alongside interviews with teachers to provide a comprehensive look at why many members of Gen Z hesitate to pursue business ventures.

How financial literacy shapes entrepreneurial intent

The study focuses on three measures of financial literacy: objective knowledge, self-assessed knowledge, and calibration—the match between actual knowledge and perceived knowledge. All three are shown to play a role in whether students express interest in starting their own businesses, but calibration emerges as the strongest predictor.

Students with high levels of objective literacy are more likely to demonstrate entrepreneurial interest. However, the effect is only marginally stronger than that of self-assessed literacy. In contrast, calibration proves decisive. Those who correctly evaluate their own skills show the highest entrepreneurial engagement, while students who overestimate or underestimate their knowledge tend to withdraw from business ambitions.

This finding highlights the danger of the Dunning–Kruger effect, where individuals with lower ability often rate themselves more highly than warranted. The research shows that many students fall into this trap, overstating their financial skills and weakening their entrepreneurial readiness. Without accurate self-perception, both underconfident and overconfident students fail to build momentum toward entrepreneurship.

Why the educational system falls short

To complement the survey data, the authors interviewed teachers from secondary schools and universities. The responses underline the uneven quality of financial education in Slovakia. Students outside economics-oriented schools are given little exposure to real-world financial topics, leaving them unprepared to assess opportunities and risks. Even within specialized programs, teaching often focuses on theory rather than practice, limiting the development of applicable skills.

Teachers also note that students respond best when financial education is presented through practical, hands-on experiences. Real-life case studies, interactive discussions, and scenario-based exercises capture their attention more effectively than traditional lectures. Yet such approaches remain rare, leaving a gap between what students need and what the current curriculum provides.

The study further points to the broader business environment in Slovakia as an obstacle. Students perceive the regulatory and legislative framework as bureaucratic and unfriendly toward new entrepreneurs. Only a small minority view the system as favorable for launching startups. This perception, coupled with gaps in financial education, contributes to low levels of entrepreneurial confidence among Generation Z.

What solutions can bridge the gap

The authors propose a clear intervention: a compulsory secondary school module titled “Financial Literacy with Elements of Entrepreneurship.” This course would combine traditional instruction with innovative teaching methods such as simulations, business games, and interactive scenarios. Artificial intelligence–supported feedback would provide real-time insights into performance, helping students calibrate their knowledge more accurately.

The curriculum would emphasize both financial competence and self-assessment skills, training students to evaluate their abilities realistically. By tackling calibration directly, the module aims to reduce overconfidence while building genuine confidence among students with stronger knowledge. The approach would also align with how Generation Z prefers to learn, through interactive, personalized, and technology-enhanced experiences.

The proposal is designed not only for Slovakia but also for adaptation across the Visegrád Group countries and the broader European Union. Policymakers are encouraged to integrate this type of program into national education systems to close gaps between awareness and action in entrepreneurship.

The authors also recommend more research to test the long-term effects of such interventions. They recommend longitudinal studies to track how financial literacy and calibration influence entrepreneurial outcomes over time. Cross-country comparisons would further illuminate whether these dynamics are unique to Slovakia or part of a wider European challenge.