What do Australian 15-year olds share with their peers in New Zealand and Estonia?
Well, inning accordance with the Programme for International Student Evaluation (PISA) report, Australian, Kiwi and Estonian teenagers rank third-equal worldwide for their financial literacy skills.
The PISA research study, an initiative of the Organisation for Economic Co-operation and Advancement (OECD), found just 15-year olds from the Flemish-speaking regions of Belgium and their counterparts in Shanghai understood finance better than Australian youngsters.
While this is an encouraging outcome it is essential not to read too much into it. In the first place, PISA surveyed just 18 nations for financial literacy.
And secondly we had to share third-place honours with the Kiwis (Estonia we can deal with), which shows that Australia has considerable space for improvement in financial literacy.
This has been recognised by a broad range 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 Technique’, ASIC sets out a comprehensive strategy encompassing school curriculum, complimentary details services, guidance programs, industry partnerships and ongoing research study.
ASIC specifies monetary literacy as “a combination of financial knowledge, abilities, attitudes and behaviours necessary to make sound financial choices, based on personal situations, to enhance financial wellness”.
” In today’s hectic consumer society, monetary literacy is a necessary everyday life ability. It indicates being able to comprehend and negotiate the financial landscape, manage cash and financial risks efficiently and avoid financial mistakes,” ASIC says. “Improving monetary literacy can benefit anybody, no matter age, earnings or background.”
I completely support the effort to raise the level of Australians’ financial literacy. As a financial adviser I get to see first-hand the, often large, holes in monetary knowledge in the Australian neighborhood.
Cynics may argue that the financial literacy space really suits the advisory market. From my perspective, the much better the grounding our clients have in monetary ideas, the more efficient and efficient the advisory relationship.
With a financially-literate population, advisers can cut straight to the real issues instead of coaching finance 101.
Our money-smart 15-year olds augur well for the future. (By The Way, while PISA considered it as “not considerably various”, Australia had a mean rating of 526 in the financing test compared with 520 for NZ, which we can take as a win.).