A few days ago I picked up this (free) booklet in the Commonwealth Bank.
It is produced by the Commonwealth Bank Foundation who sponsored the study.
Admittedly it was a brief summary of a complex survey, but I didn't find it particularly compelling.
Some points from it:
* P3 a mild positive correllation found between financial literacy (as determined by a test) and annual personal income.
To me this doesn't mean much, there may or may not be a causative element. There was no mention of wealth or financial security except for a comment about people meeting financial emergencies (the most basic and most meagre definition of control over one's finances). This was defined as being able to raise 10% of their income within a week. We don't know if this is weekly, monthly or annual income, and permitted ways to access it (credit card borrowing could count for all I know).
* P4 profile of the least financially literate. There was no difference between 23, 33, 43 and even 53 year olds in financial literacy. The 16-20 age group had a very high financially illiteracy rate, but this had fallen by age 21 and showed no significant variation above that age (except for the 46-50 group which had a very low level of illiteracy)
* P5 had some claims that improving financial literacy of the least literate would contribute $6b pa to GDP and create 18000 new jobs.
Some of the claims included that smarter financial literacy would help job performance including better decision making, less capital wastage, better business and home purchasing decisions, higher investment in profitable businesses.
(I must admit to being very skeptical about these job creation and GDP stats wheeled out to justify almost any pet project. Car accidents, for example, are fantastic for the GDP.
Assuming financial literacy means people not playing the pokies as much, less smoking, more saving and less hire purchase, then some service industries would lose jobs. Some other industries (eg funds management and super) might gain jobs, while a proportion of increased investments would go offshore. And there is a tendency for things to balance out and not much happens either way)
The reduced need for welfare and more informed consumers might be plausible. The increased annual personal income figure seemed a bit rubbery; and there is no mention that more efficient spending and saving can increase living standards more than this (though there may or may not be a short-term sacrifice involved). No distinction was made between income and wealth, and the potential of buying ones first home sooner was not discussed.
The survey was done by telephone of 5000 Australians. For some reason they excluded people aged over 65. As usual, the bank teller was on the ball, seeing me holding the booklet, wanting to sell me stuff (sorry, 'value-added services') arising therefrom.
Rgds, Peter
It is produced by the Commonwealth Bank Foundation who sponsored the study.
Admittedly it was a brief summary of a complex survey, but I didn't find it particularly compelling.
Some points from it:
* P3 a mild positive correllation found between financial literacy (as determined by a test) and annual personal income.
To me this doesn't mean much, there may or may not be a causative element. There was no mention of wealth or financial security except for a comment about people meeting financial emergencies (the most basic and most meagre definition of control over one's finances). This was defined as being able to raise 10% of their income within a week. We don't know if this is weekly, monthly or annual income, and permitted ways to access it (credit card borrowing could count for all I know).
* P4 profile of the least financially literate. There was no difference between 23, 33, 43 and even 53 year olds in financial literacy. The 16-20 age group had a very high financially illiteracy rate, but this had fallen by age 21 and showed no significant variation above that age (except for the 46-50 group which had a very low level of illiteracy)
* P5 had some claims that improving financial literacy of the least literate would contribute $6b pa to GDP and create 18000 new jobs.
Some of the claims included that smarter financial literacy would help job performance including better decision making, less capital wastage, better business and home purchasing decisions, higher investment in profitable businesses.
(I must admit to being very skeptical about these job creation and GDP stats wheeled out to justify almost any pet project. Car accidents, for example, are fantastic for the GDP.
Assuming financial literacy means people not playing the pokies as much, less smoking, more saving and less hire purchase, then some service industries would lose jobs. Some other industries (eg funds management and super) might gain jobs, while a proportion of increased investments would go offshore. And there is a tendency for things to balance out and not much happens either way)
The reduced need for welfare and more informed consumers might be plausible. The increased annual personal income figure seemed a bit rubbery; and there is no mention that more efficient spending and saving can increase living standards more than this (though there may or may not be a short-term sacrifice involved). No distinction was made between income and wealth, and the potential of buying ones first home sooner was not discussed.
The survey was done by telephone of 5000 Australians. For some reason they excluded people aged over 65. As usual, the bank teller was on the ball, seeing me holding the booklet, wanting to sell me stuff (sorry, 'value-added services') arising therefrom.
Rgds, Peter
