Financial Literacy-It’s never too late to learn.
Being financially secure is a key component of overall well-being. But, too many Australians don’t have sufficient basic financial literacy that can help them achieve it.
Financial literacy is going backwards in Australia. The household income and labour dynamics in Australia (HILDA) survey of about 17,000 people finding fewer people could answer five money related questions correctly in 2020 than in 2016, particularly people aged 35 and under.
The questions asked in the survey tested an understanding of key financial principles including interest, inflation, investing and basic arithmetic. Here’s an example of one of the survey questions:
‘Imagine now that the interest rate on your savings account was 1% a year and inflation was 2% per year. After one year, would you be able to buy more than today, exactly the same as today, or less than today with the money in this account?’
If you want to test yourself on the five survey questions, please click here. The answers are at the bottom of this article, but no peaking.
Being financially secure doesn’t mean being rich, it means having a stable income, being able to pay living expenses and having enough savings for an emergency.
To be financially secure, understanding money and particulalry cashflow is essential. Poor financial literacy can have lifelong consequences. It can lead to missed investment opportunities, inadequate retirement savings, and of course, can prevent people from experiencing the security homeownership provides.
By acquiring basic knowledge and skills, people can move from low to average financial literacy and put a lot more money in their pockets. A first step is understanding your personal or family cashflow and the knowledge you need to balance your family budget.
A simple Google search will help you find some basic resources.
Answers; Q1-A, Q2-B, Q3-C, Q4-B, Q5-A
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