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 Student Assessment (PISA) report, Australian, Kiwi and Estonian teenagers rank third-equal worldwide for their financial literacy skills.
The PISA study, an effort of the Organisation for Economic Co-operation and Advancement (OECD), found only 15-year olds from the Flemish-speaking areas of Belgium and their counterparts in Shanghai understood finance much better than Australian youngsters.
While this is a motivating outcome it’s important not to read excessive into it. In the first place, PISA surveyed just 18 nations for monetary literacy.
And secondly we had to share third-place honours with the Kiwis (Estonia we can deal with), which shows that Australia has substantial room for improvement in financial literacy.
This has actually been recognised by a broad variety of stakeholders, including the Australian Securities and Investments Commission (ASIC), which is coordinating a nationwide push to enhance monetary literacy across the board.
In its just-published ‘National Financial Literacy Method’, ASIC lays out an in-depth plan of action including school curriculum, totally free info services, assistance programs, industry partnerships and continuous research.
ASIC defines financial literacy as “a mix of financial understanding, skills, mindsets and behaviours required to make sound financial choices, based upon personal scenarios, to improve financial wellness”.
” In today’s hectic consumer society, monetary literacy is an important daily life ability. It implies being able to understand and work out the monetary landscape, handle money and financial dangers efficiently and prevent financial risks,” ASIC says. “Improving monetary literacy can benefit anyone, no matter age, earnings or background.”
I fully support the effort to raise the level of Australians’ financial literacy. As a financial adviser 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 gap in fact fits the advisory market. From my viewpoint, the better the grounding our clients have in monetary ideas, the more efficient 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 15-year olds augur well for the future. (Incidentally, while PISA deemed it as “not substantially different”, Australia had a mean score of 526 in the finance test compared with 520 for NZ, which we can take as a win.).