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

The PISA study, an initiative 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 financing much better than Australian youngsters.

While this is a motivating outcome it is very important not to check out excessive into it. In the first place, PISA surveyed just 18 nations for monetary literacy.

And second of all we needed to share third-place honours with the Kiwis (Estonia we can live with), which shows that Australia has substantial space for improvement in monetary literacy.

This has been recognised by a broad variety of stakeholders, including 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 Method', ASIC sets out an in-depth plan of action encompassing school curriculum, totally free info services, assistance programs, industry partnerships and continuous research study.

ASIC specifies financial literacy as "a mix of monetary knowledge, abilities, mindsets and behaviours essential to make sound monetary decisions, based upon individual circumstances, to improve financial health and wellbeing".

" In today's fast-paced customer society, monetary literacy is a vital everyday life ability. It suggests having the ability to comprehend and negotiate the monetary landscape, handle cash and financial dangers effectively and prevent monetary risks," ASIC states. "Improving monetary literacy can benefit anybody, no matter age, income or background."

I totally support the effort to raise the level of Australians' financial literacy. As a monetary adviser I get to see first-hand the, in some cases large, holes in monetary understanding in the Australian community.

Skeptics may argue that the financial literacy space actually suits the advisory industry. However from my viewpoint, the much better the grounding our clients have in financial concepts, the more effective and productive the advisory relationship.

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

Our money-smart/A15-year olds augur well for the future. (By The Way, while PISA deemed 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.).

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