Lift financial literacy, create wealth
from The Sydney Morning Herald,
http://www.smh.com.au/news/National...05/02/24/1109180044477.html?from=moreStories#
Men, young people and low-income households have the lowest financial literacy levels, according to a study that found most Australians rely on trial and error to manage their money.
But improving the knowledge of the most financially illiterate could boost the economy by $6 billion a year and create 16,000 new jobs.
A study by the Commonwealth Bank, Monash University and Eureka Strategic Research has linked poor understanding of money matters to sleeplessness, increased smoking, personal stress and trouble paying bills.
Of the 5000 people surveyed, those with the worst financial literacy scores were more likely to be men (55.6 per cent), in low-income households (44 per cent on less than $50,000), aged 16 to 20 (38.6), students (29.6) or unemployed (7). "Those who most need good financial literacy skills to make the most of the money that they do have are at present the least equipped," said the chief executive of the Commonwealth Bank, David Murray.
The researchers said even a slight improvement in financial knowledge among these groups would increase annual incomes by $3204 and reduce the likelihood of unemployment.
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The Minister for Revenue and Assistant Treasurer, Mal Brough, said the Federal Government's taskforce on the issue was seeking to have money management lessons embedded into English and mathematics classes in schools.
Mr Brough said financial literacy should be taught as a core subject to younger students because by the time a student reached year 11 it could be too late if they were working part-time and signing contracts for mobile phones. While lack of financial literacy was highest among the young, it remained a problem across all age groups.
Mr Brough said people were "bombarded daily with opportunities for finance", such as interest-free, pay-later deals they did not understand. "People are struggling with credit card debt, struggling with mobile phone debts and wondering how they can afford the new car," he said.
It would take a cultural change, but the basic principle was "you can't spend more than you have", he said.
Australia's long stretch without recession or war could be blamed for financial ignorance in the community, Mr Murray said. He denied banking products were becoming too complicated. "As a society we've seen a very long period of no difficulties."
Most people (86 per cent) surveyed said they learnt to manage money by trial and error, with 77 per cent asking family and friends. While most people understood how to minimise credit card interest, many did not know how to control mobile phone bills or how to deal with spiralling debt. Half did not know the cheapest way to obtain a secured loan.
Mr Murray said yesterday that the economy could deal with a rise in interest rates, but the Reserve Bank needed to be cautious. "The important thing is that confidence is not knocked around and house prices behave in a fairly predictable way."
Knowledge Tree
Where people get their financial information from:
Trial and error 86%
Friends, family, colleagues 77%
Media 52%
Banks, credit unions 36%
Brochures 34%
School 31%
Financial advisers, seminars 31%
University, TAFE 20%
Internet 16%
Other 10%
from The Sydney Morning Herald,
http://www.smh.com.au/news/National...05/02/24/1109180044477.html?from=moreStories#
Men, young people and low-income households have the lowest financial literacy levels, according to a study that found most Australians rely on trial and error to manage their money.
But improving the knowledge of the most financially illiterate could boost the economy by $6 billion a year and create 16,000 new jobs.
A study by the Commonwealth Bank, Monash University and Eureka Strategic Research has linked poor understanding of money matters to sleeplessness, increased smoking, personal stress and trouble paying bills.
Of the 5000 people surveyed, those with the worst financial literacy scores were more likely to be men (55.6 per cent), in low-income households (44 per cent on less than $50,000), aged 16 to 20 (38.6), students (29.6) or unemployed (7). "Those who most need good financial literacy skills to make the most of the money that they do have are at present the least equipped," said the chief executive of the Commonwealth Bank, David Murray.
The researchers said even a slight improvement in financial knowledge among these groups would increase annual incomes by $3204 and reduce the likelihood of unemployment.
AdvertisementAdvertisement
The Minister for Revenue and Assistant Treasurer, Mal Brough, said the Federal Government's taskforce on the issue was seeking to have money management lessons embedded into English and mathematics classes in schools.
Mr Brough said financial literacy should be taught as a core subject to younger students because by the time a student reached year 11 it could be too late if they were working part-time and signing contracts for mobile phones. While lack of financial literacy was highest among the young, it remained a problem across all age groups.
Mr Brough said people were "bombarded daily with opportunities for finance", such as interest-free, pay-later deals they did not understand. "People are struggling with credit card debt, struggling with mobile phone debts and wondering how they can afford the new car," he said.
It would take a cultural change, but the basic principle was "you can't spend more than you have", he said.
Australia's long stretch without recession or war could be blamed for financial ignorance in the community, Mr Murray said. He denied banking products were becoming too complicated. "As a society we've seen a very long period of no difficulties."
Most people (86 per cent) surveyed said they learnt to manage money by trial and error, with 77 per cent asking family and friends. While most people understood how to minimise credit card interest, many did not know how to control mobile phone bills or how to deal with spiralling debt. Half did not know the cheapest way to obtain a secured loan.
Mr Murray said yesterday that the economy could deal with a rise in interest rates, but the Reserve Bank needed to be cautious. "The important thing is that confidence is not knocked around and house prices behave in a fairly predictable way."
Knowledge Tree
Where people get their financial information from:
Trial and error 86%
Friends, family, colleagues 77%
Media 52%
Banks, credit unions 36%
Brochures 34%
School 31%
Financial advisers, seminars 31%
University, TAFE 20%
Internet 16%
Other 10%
