More than one in four (26%) Australians lack financial skills and knowledge, costing average households as much as $7,381 annually, according to an Allianz report.
Allianz surveyed over 1,000 people in Australia alongside six other countries to test their understanding of basic financial information, such as interest rates, inflation, and investment risks and returns.
The survey found that 26% of the respondents had low financial literacy, 58% had average financial literacy, and 17% had high financial literacy. Two-thirds (66%) of the respondents said they were worried that they know less than the average investor about financial markets and investments.
“Low financial literacy really hurts,” said Allianz Chief Economist Ludovic Subran. “In fact, over long investment periods, like when saving for retirement, it can literally cost you a fortune. But the good news is that making smart financial decisions is not rocket science. By acquiring basic knowledge and skills, people can move from low to average financial literacy and put a lot more money in their pockets.”
Out of the nine questions, the mean number of correct questions from women was 3.7 (median 4), while that of men was 4.5 (median 5).
The survey also found a higher number of women with low financial literacy – with zero to two correct answers (30% vs 21%) – and a lower share in the high financial literacy category, with seven to nine correct answers (11% vs 19%).
“Typically, financial literacy programmes concentrate on boosting numeracy skills, but financial literacy is more than mathematics,” said Patricia Pelayo Romero, senior economist at Allianz and co-author of the study. “Any successful financial literacy intervention, particularly those catering to women and young people, should start with confidence building.”
Allianz has launched an online financial literacy hub to help Australians become more financial literate. Users can find easy-to-understand financial information and explainers, use interactive budgeting tools, and register for free coaching from Allianz experts.
