A notable proportion of Australians are not financially literate, with the younger generations lacking the most knowledge.
These are the findings of a survey of 1,000 people by Canstar, one of Australia’s best-known and respected comparison websites. People surveyed were asked to take up a quiz that consisted of 21 questions to assess people’s level of understanding about financial products, such as home loans, credit cards, energy bills, the NBN or bank accounts.
Effie Zahos, Canstar’s Editor-at-Large, said although the majority of Australians consider themselves financially literate (60 percent), nearly half of them (46 percent) did not pass the test.
She noted that the result is worrying, with the average score being 11 out of 21. Zahos said what’s surprising is that although women often take control of the household bills, males were doing better than females, with 66 percent of men passing the quiz compared to 42 parent of females.
She said financial education “goes a long way” to improving people’s bottom line, especially during the cost of living crisis.
“If, for example, you don’t understand how the products or services you are paying for work, how do you know if you’re getting the best value out of that? How do you know if you’re paying too much interest? Or you’re not using your energy plan the right way, getting the best value here?” she told 2GB.
Brush Up on Your Financial Skills
Zahos also encouraged those who are not equipped with financial knowledge to “brush up on some skills.”“Knowledge is power,” she said, “I’m not saying by any means that financial education is going to solve the cost of living crisis.”
However, amid the cost of living crisis, consumers are showing signs of optimism in terms of personal finances, with the jobless rate low and pay packets rising.
According to the ANZ and Roy Morgan survey, consumer confidence improved a little last week, lifting 1.4 points, although it is still fixed well below historical averages.
The index came in at 77.3 points last week, well below the 111.4 monthly average since 1990.
ANZ senior economist Adelaide Timbrell said the improvement over the week was driven by optimism in financial conditions—present and future.
“But confidence was still among the worst 10 results since January 2020, seven of which have occurred between March and May of 2023,” Timbrell said.
She said the results spoke to the pressures felt from the high cost of living and rising interest rates, which were working against the low unemployment and accelerating wage growth.
Confidence among mortgage holders remains lower than for renters and those who own their homes outright.
