Exactly What do Australian 15-year olds have in common with their peers in New Zealand and Estonia?
Well, according to the Programme for International Trainee Evaluation (PISA) report, Australian, Kiwi and Estonian teenagers rank third-equal worldwide for their financial literacy abilities.
The PISA research study, an initiative of the Organisation for Economic Co-operation and Development (OECD), discovered just 15-year olds from the Flemish-speaking areas of Belgium and their equivalents in Shanghai understood financing much better than Australian children.
While this is an encouraging outcome it’s important not to read too much into it. In the first place, PISA surveyed only 18 nations for financial literacy.
And secondly we had to share third-place honours with the Kiwis (Estonia we can live with), which shows that Australia has significant room for improvement in monetary literacy.
This has been recognised by a broad range of stakeholders, consisting of the Australian Securities and Investments Commission (ASIC), which is collaborating a nationwide push to improve financial literacy across the board.
In its just-published ‘National Financial Literacy Strategy’, ASIC sets out a detailed plan of action including school curriculum, free information services, assistance programs, market partnerships and continuous research.
ASIC specifies monetary literacy as “a combination of financial understanding, abilities, mindsets and behaviours necessary to make sound monetary choices, based on individual scenarios, to improve monetary wellness”.
” In today’s fast-paced customer society, financial literacy is an essential everyday life skill. It implies having the ability to understand and work out the financial landscape, manage money and financial dangers successfully and avoid financial pitfalls,” ASIC states. “Improving monetary literacy can benefit anybody, no matter age, income or background.”
I completely support the effort to raise the level of Australians’ monetary literacy. As a financial advisor I get to see first-hand the, sometimes big, holes in financial knowledge in the Australian neighborhood.
Cynics may argue that the monetary literacy gap in fact fits the advisory market. From my point of view, the much better the grounding our customers have in financial ideas, the more effective and efficient the advisory relationship.
With a financially-literate population, consultants can cut straight to the real issues instead of training finance 101.
Our money-smart 15-year olds augur well for the future. (By The Way, while PISA considered it as “not significantly various”, Australia had a mean rating of 526 in the finance test compared to 520 for NZ, which we can take as a win.).
