Financial literacy is not just the ability to define inflation, interest rates or diversification. It is the ability to use financial knowledge when making decisions. That is why passive learning is often not enough.

The OECD/INFE 2023 international survey found that only 34% of adults across participating countries and economies reached the minimum target score for financial literacy. The problem is not limited to one country. Around the world, many people use financial products without fully understanding risk, interest, inflation or long-term planning.

Kazakhstan also has a clear need for stronger financial education. The country has more than 4.1 million pupils in over 8,000 schools. Kazakhstan’s financial literacy index increased from 39.5% in 2021 to 42% in 2025, showing progress but also a large opportunity for improvement.

The question is: how should students learn finance?

Traditional teaching often begins with definitions. Students memorize terms like “loan,” “bond,” “inflation,” and “interest rate.” But real financial life is not a vocabulary test. It is a sequence of decisions under uncertainty.

A simulation changes the learning process.

Instead of reading that inflation reduces purchasing power, a student sees their simulated savings lose value. Instead of memorizing that higher interest rates reduce borrowing, a student raises rates and watches loans become more expensive. Instead of hearing that debt can become risky, a student issues too many bonds and sees investor confidence fall.

This creates a learning loop:

  1. make a decision;
  2. see the consequence;
  3. receive explanation;
  4. reflect;
  5. try again.

That loop is powerful because finance is full of trade-offs. A decision can be good in one indicator and bad in another. Lower interest rates may support borrowing but increase inflation risk. More government spending may protect households but raise debt. Bank regulation may improve stability but reduce credit availability.

Simulation helps students understand that good financial thinking is not about choosing the obvious answer. It is about balancing risks.

For teachers, simulation also creates discussion. After a scenario, a class can debate:

  • Should we protect savers or borrowers?
  • Should the government prioritize inflation or unemployment?
  • Should banks be rescued during a crisis?
  • Is it fair to use taxpayer money to stabilize markets?
  • When is debt useful, and when does it become dangerous?

This makes finance more democratic. Students from schools without advanced economics clubs or private tutors can still practice serious decision-making.

Phronesia is built around this idea. It does not treat finance as a list of definitions. It turns finance into a system students can interact with.

The key lesson: financial literacy grows when students practice decisions before real life makes those decisions expensive.