Why Financial Literacy Is A Win-win For Australia
Exactly What do Australian 15-year olds have in common with their peers in New Zealand and Estonia?
Well, inning accordance with the Program for International Trainee Evaluation (PISA) report, Australian, Kiwi and Estonian teens rank third-equal in the world for their financial literacy skills.
The PISA study, an effort of the Organisation for Economic Co-operation and Development (OECD), discovered only 15-year olds from the Flemish-speaking regions of Belgium and their counterparts in Shanghai understood financing much better than Australian youngsters.
While this is an encouraging result it’s important not to check out too much into it. In the first place, PISA surveyed just 18 countries for monetary literacy.
And second of all we had to share third-place honours with the Kiwis (Estonia we can deal with), which shows that Australia has substantial room for enhancement in monetary literacy.
This has actually been identified by a broad range of stakeholders, including the Australian Securities and Investments Commission (ASIC), which is coordinating a nationwide push to improve monetary literacy across the board.
In its just-published ‘National Financial Literacy Strategy’, ASIC sets out a detailed strategy including school curriculum, complimentary details services, assistance programs, industry collaborations and ongoing research.
ASIC specifies monetary literacy as “a combination of monetary understanding, abilities, mindsets and behaviours needed to make sound monetary decisions, based on individual scenarios, to improve monetary wellbeing”.
” In today’s fast-paced consumer society, monetary literacy is a vital daily life ability. It means being able to understand and work out the financial landscape, handle loan and financial threats efficiently and prevent financial pitfalls,” ASIC states. “Improving monetary literacy can benefit anyone, regardless of age, earnings or background.”
I completely support the effort to raise the level of Australians’ financial literacy. As a financial advisor I get to see first-hand the, in some cases large, holes in financial understanding in the Australian community.
Cynics may argue that the financial literacy space really matches the advisory industry. But from my viewpoint, the much better the grounding our customers have in financial principles, the more effective and efficient the advisory relationship.
With a financially-literate population, consultants 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 deemed it as “not significantly different”, Australia had a mean score of 526 in the finance test compared with 520 for NZ, which we can take as a win.).