More than a third of Australians are financially illiterate, according to newly released research from the University of Newcastle.
The research, which forms the basis of a new report, Financial Wellbeing and General Life Satisfaction in Australia, also found that improving financial literacy leads to better financial outcomes which in turn leads to higher overall life satisfaction.
The research was undertaken by the University of Newcastle as part of the Financial Literacy Program with Greater Bank, with the aim of validating the need for a greater focus on financial literacy and financial wellbeing, particularly among young adults.
Lead author of the report, University of Newcastle Business School researcher from the College of Human and Social Futures, Professor Christina Boedker, said the results from a nationwide survey clearly showed the benefits of financial literacy.
“We found that just 66 per cent of Australians can be classed as financially literate. Only around one in four people answering all five financial literacy questions correctly,” Professor Boedker said.
“We also found that financial literacy has a significant impact on a person's general wellbeing, not just on how people perceive their financial wellbeing.
“With rising living costs and high interest rates, the importance of having higher levels of financial literacy, backed up by financial planning activities such as having a household budget or setting longer-term savings goals, is as important as ever, as it leads to greater financial wellbeing."
Professor Christina Boedker, University of Newcastle
“This in turn feeds into overall life satisfaction, with regression analysis showing that individuals with higher financial well-being experience significantly higher levels of general life satisfaction.
“We also found that people with higher financial literacy were less likely to experience financial hardship."
Across key demographics, the report also found:
- 43% of young people aged 18 to 24 years reported that they could not meet their personal debt obligations.
- Young people have the lowest levels of financial literacy and financial autonomy of all age groups.
- Women have lower levels of financial literacy, but demonstrated better financial planning behaviours.
- While younger men have higher levels of financial literacy, they are less likely than women to apply their financial knowledge to make good financial decisions.
Greater Bank Chief Financial Officer, Bob Moffat, said the research highlighted the need for more financial education programs.
“The research clearly shows that improving financial literacy can have significant benefits, so we want to make financial education available to more people.
Bob Moffat, Greater Bank Chief Financial Officer.
“We’re doing just that through the Greater Bank Finance Academy’s financial literacy outreach program that has been developed by the University of Newcastle. The curriculum-based program teaches students about money, saving, planning, and investing, as well as the benefits and potential pitfalls of credit cards, after-pay options and other financial products.
“The program is delivered by University of Newcastle student ambassadors and Greater Bank employees to high school students across the Hunter, Central Coast, the Central West and Northern regions of NSW. There is capacity however, for more high schools in those regions to get involved.
University of Newcastle
“These outcomes could potentially be reduced through improving financial literacy, which will have a flow-on effect throughout their lives.”
The peer-reviewed report is available HERE
Further information regarding the Greater Bank Finance Academy and financial literacy programs is available at – greater.com.au/uon
