Why Financial Literacy Is A Win-win For Australia

Exactly What do Australian 15-year olds share with their peers in New Zealand and Estonia?

Well, inning accordance with the Program for International Student Evaluation (PISA) report, Australian, Kiwi and Estonian teens rank third-equal in the world for their financial literacy skills.

The PISA research study, an effort of the Organisation for Economic Co-operation and Advancement (OECD), discovered only 15-year olds from the Flemish-speaking regions of Belgium and their counterparts in Shanghai comprehended finance better than Australian youngsters.

While this is an encouraging outcome it is very important not to read excessive into it. In the first place, PISA surveyed only 18 countries for financial literacy.

And second of all we had to share third-place honours with the Kiwis (Estonia we can cope with), which reveals that Australia has considerable room for improvement in monetary literacy.

This has been recognised by a broad series of stakeholders, consisting of the Australian Securities and Investments Commission (ASIC), which is collaborating an across the country push to improve financial literacy across the board.

In its just-published ‘National Financial Literacy Strategy’, ASIC sets out a comprehensive strategy incorporating school curriculum, complimentary information services, guidance programs, market collaborations and ongoing research.

ASIC specifies monetary literacy as “a mix of monetary knowledge, abilities, attitudes and behaviours necessary to make sound monetary choices, based upon personal scenarios, to enhance monetary wellness”.

” In today’s hectic consumer society, monetary literacy is a vital everyday life skill. It implies having the ability to understand and work out the monetary landscape, handle cash and financial dangers effectively and prevent financial risks,” ASIC states. “Improving monetary literacy can benefit anyone, regardless of age, earnings or background.”

I totally support the effort to raise the level of Australians’ monetary literacy. As a monetary consultant I get to see first-hand the, often big, holes in financial knowledge in the Australian community.

Skeptics might argue that the financial literacy gap really suits the advisory market. From my viewpoint, the much better the grounding our clients have in financial principles, the more efficient and productive the advisory relationship.

With a financially-literate population, advisors can cut straight to the real issues instead of training financing 101.

Our money-smart 15-year olds augur well for the future. (Incidentally, while PISA considered it as “not substantially various”, Australia had a mean score of 526 in the financing test compared with 520 for NZ, which we can take as a win.).