Exactly What do Australian 15-year olds share with their peers in New Zealand and Estonia?
Well, according to the Programme for International Student Assessment (PISA) report, Australian, Kiwi and Estonian teens rank third-equal in the world for their financial literacy abilities.
The PISA research study, an initiative of the Organisation for Economic Co-operation and Advancement (OECD), discovered just 15-year olds from the Flemish-speaking regions of Belgium and their counterparts in Shanghai understood financing much better than Australian children.
While this is an encouraging outcome it’s important not to read excessive into it. In the first place, PISA surveyed just 18 nations for financial literacy.
And second of all we had to share third-place honours with the Kiwis (Estonia we can cope with), which reveals that Australia has substantial space for enhancement in monetary literacy.
This has been acknowledged by a broad series of stakeholders, consisting of the Australian Securities and Investments Commission (ASIC), which is collaborating a nationwide push to enhance monetary literacy across the board.
In its just-published ‘National Financial Literacy Strategy’, ASIC lays out a detailed plan of action incorporating school curriculum, complimentary information services, guidance programs, market partnerships and continuous research study.
ASIC specifies financial literacy as “a mix of monetary understanding, abilities, attitudes and behaviours needed to make sound monetary decisions, based upon individual scenarios, to improve monetary health and wellbeing”.
” In today’s busy customer society, financial literacy is a necessary daily life ability. It means having the ability to comprehend and negotiate the monetary landscape, manage cash and financial threats effectively and prevent financial pitfalls,” ASIC states. “Improving financial literacy can benefit anyone, regardless of age, earnings 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 large, holes in financial knowledge in the Australian neighborhood.
Skeptics might argue that the monetary literacy gap actually fits the advisory market. From my perspective, the much better the grounding our clients have in financial concepts, 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. (Incidentally, while PISA deemed it as “not significantly different“, Australia had a mean score of 526 in the financing test compared to 520 for NZ, which we can take as a win.).