Exactly What do Australian 15-year olds have in common with their peers in New Zealand and Estonia?
Well, according to the Program for International Student Evaluation (PISA) report, Australian, Kiwi and Estonian teenagers rank third-equal in the world for their financial literacy skills.
The PISA research 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 equivalents in Shanghai understood finance much better than Australian youngsters.
While this is a motivating result it is essential not to check out excessive into it. In the first place, PISA surveyed only 18 countries for monetary literacy.
And second of all we had to share third-place honours with the Kiwis (Estonia we can cope with), which shows that Australia has considerable space for enhancement in financial literacy.
This has actually been acknowledged by a broad range of stakeholders, consisting of the Australian Securities and Investments Commission (ASIC), which is coordinating 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 incorporating school curriculum, totally free information services, guidance programs, market collaborations and continuous research.
ASIC specifies monetary literacy as “a combination of monetary understanding, skills, mindsets and behaviours necessary to make sound monetary decisions, based on personal circumstances, to improve financial health and wellbeing”.
” In today’s fast-paced consumer society, financial literacy is an essential daily life ability. It means having the ability to understand and work out the financial landscape, manage money and monetary dangers effectively and prevent monetary risks,” ASIC states. “Improving financial literacy can benefit anybody, no matter age, earnings or background.”
I fully support the effort to raise the level of Australians’ financial literacy. As a financial advisor I get to see first-hand the, often large, holes in financial knowledge in the Australian neighbourhood.
Cynics may argue that the monetary literacy gap really fits the advisory industry. From my perspective, the better the grounding our clients have in financial principles, the more efficient and productive the advisory relationship.
With a financially-literate population, advisors can cut straight to the real issues instead of coaching finance 101.
Our money-smart 15-year olds augur well for the future. (Incidentally, while PISA considered it as “not considerably different”, Australia had a mean rating of 526 in the financing test compared with 520 for NZ, which we can take as a win.).