Why Financial Literacy Is A Win-win For Australia
What do Australian 15-year olds share with their peers in New Zealand and Estonia?
Well, according to the Program for International Student Assessment (PISA) report, Australian, Kiwi and Estonian teenagers rank third-equal on the planet for their monetary literacy abilities.
The PISA research study, an effort of the Organisation for Economic Co-operation and Development (OECD), discovered just 15-year olds from the Flemish-speaking regions of Belgium and their equivalents in Shanghai comprehended finance better than Australian children.
While this is a motivating result it is necessary not to read too much into it. In the first place, PISA surveyed only 18 countries for monetary literacy.
And secondly we needed to share third-place honours with the Kiwis (Estonia we can live with), which reveals that Australia has considerable room for improvement in financial literacy.
This has been identified by a broad range of stakeholders, including the Australian Securities and Investments Commission (ASIC), which is coordinating an across the country push to improve financial literacy across the board.
In its just-published ‘National Financial Literacy Technique’, ASIC lays out an in-depth plan of action including school curriculum, totally free information services, guidance programs, market collaborations and continuous research.
ASIC specifies financial literacy as “a combination of financial understanding, skills, mindsets and behaviours necessary to make sound monetary decisions, based on individual situations, to enhance monetary health and wellbeing”.
” In today’s hectic customer society, financial literacy is a necessary everyday life ability. It implies having the ability to understand and negotiate the monetary landscape, manage cash and monetary risks effectively and prevent financial mistakes,” ASIC states. “Improving monetary literacy can benefit anyone, despite age, income or background.”
I completely support the effort to raise the level of Australians’ financial literacy. As a financial consultant I get to see first-hand the, in some cases big, holes in monetary knowledge in the Australian neighborhood.
Skeptics may argue that the financial literacy space really suits the advisory industry. From my viewpoint, the better the grounding our customers have in financial ideas, the more efficient and efficient the advisory relationship.
With a financially-literate population, advisors can cut straight to the real issues instead of coaching financing 101.
Our money-smart 15-year olds augur well for the future. (Incidentally, while PISA deemed it as “not substantially different”, Australia had a mean rating of 526 in the financing test compared to 520 for NZ, which we can take as a win.).