Retirement Income

Joanita Wibowo

Most Australians fail this financial “consciousness” test

Most Australians fail this financial “consciousness” test

Would you describe yourself as financially literate?

On the surface, Australians may seem to have a great understanding of finances – in the Standard & Poor's 2015 Global Financial Literacy Survey, Australia ranked ninth worldwide for the proportion of adults who met their criteria for financial literacy.

However, there was a considerable gap in literacy between the rich and the poor – while three quarters of the richest 60 per cent of Australian households had satisfactory levels of literacy, only half of the poorest 40 per cent gained the same grade.

The outlook is even worse for women. The 2018 Household, Income and Labour Dynamics in Australia (HILDA) Survey found that women showed significantly lower levels of financial literacy than men.

Now, a new index has found that the financial ‘consciousness’ of Australians has dipped further, with the average person scoring 48 out of 100.

The Financial Consciousness Index, developed by Deloitte Access Economics and commissioned by Comparethemarket, surveyed 3,000 individuals on their financial experiences and understanding of various financial topics.

The survey included calculation questions surrounding interest rate, savings and investments as well as those pertaining personal habits such as “What best describes your approach to your finances?” and “When making significant financial decisions, who do you typically consult with?”

The index found that while Australians could still be considered as financially conscious, their average score in the index has declined from 51 in 2018 to 48 this year.

According to the index’s analysis, there are now an estimated 7.5 million Australians who struggle with their bills, savings and job security, up by nearly 2 million from last year.

The report said the slump in the levels of financial consciousness was not “necessarily surprising”, as low household income growth weakened people’s financial position and brought their comprehension of financial matters down.

Try the quiz yourself here.