Financial Literacy In Australia

According to the Financial Literacy Survey conducted by the Australian Securities and Investments Commission (ASIC) in 2019, only 44% of Australians have a basic level of financial literacy. It also highlighted that Australians have the highest level of financial stress and struggles with budgeting among all developed countries. The report suggests that this poor financial literacy is not only affecting the individuals but also the Australian economy. With the many resources and initiatives available to help improve financial literacy, it's important for individuals to take advantage of these resources to gain control of their future and work towards making better financial decisions.

What is Financial Literacy?

Financial literacy is an important skill that enables individuals to make informed decisions about their money, such as how to save, invest, and budget effectively. In Australia, there are various initiatives and resources available to help people improve their financial literacy and gain control over their finances.

One important aspect of financial literacy in Australia is understanding the country's banking and credit system. The Reserve Bank of Australia (RBA) is the country's central bank and is responsible for monetary policy and financial stability. There are also four major commercial banks in Australia: Commonwealth Bank, Westpac, ANZ, and NAB, as well as many smaller banks and credit unions. It is important for individuals to understand the different products and services offered by these institutions, such as savings accounts, credit cards, and loans, in order to make informed decisions about how to manage their money.

The Australian Securities and Investments Commission (ASIC) is an independent government agency that regulates the Australian financial system and provides information and guidance to consumers on financial matters. ASIC's Moneysmart website is a useful resource for individuals looking to improve their financial literacy, as it provides information on a wide range of topics, including budgeting, credit, investing, and superannuation (retirement savings).

How can I improve my financial literacy?

The Australian government provides a number of initiatives to promote financial literacy, such as the National Financial Literacy Strategy, which was developed to improve the financial literacy of all Australians. The strategy has several key components, including:

• Developing financial literacy programs for schools to ensure that young Australians have the knowledge and skills they need to manage their money effectively.
• Providing information and resources to help individuals make informed financial decisions at different stages of life.
• Encouraging the financial services industry to promote and support financial literacy.
• Working with community groups and other organizations to promote financial literacy and provide support for individuals who are experiencing financial hardship.

Improving financial literacy can have a significant impact on the financial well-being of individuals and families, especially for parents. Financial literacy can help parents make better financial decisions that can ultimately provide more stability, security and freedom in their lives. For example, having a good understanding of budgeting and saving can help parents ensure that they have enough money to cover their expenses and have something left over to put towards their financial goals, such as saving for a child's education or retirement. In addition, understanding credit and loans can also help parents make better financial decisions. With the knowledge of credit score and credit reports and how to manage credit, parents can access credit on favorable terms to help them achieve their goals, such as buying a home or investing in a business. Another important area of financial literacy for parents is investing, which can be crucial for ensuring long-term financial security. Understanding the basics of investing, such as the different types of investments, how to diversify a portfolio, and how to manage risk, can help parents make more informed decisions about how to grow their wealth over time.

In addition to these government-led initiatives, there are many other organizations and resources available to help Australians improve their financial literacy, such as financial counselling services, financial education programs offered by banks and other financial institutions, and online financial literacy courses.

Seek Professional Advice

There are several reasons why people should consider getting professional financial planning advice and how it can help your financial literacy.

Firstly, a financial planner can help you set financial goals and create a plan to achieve them. A good financial plan will take into account your current financial situation, as well as your short-term and long-term goals, such as saving for a down payment on a home, saving for retirement, or planning for your child's education. A financial planner can also help you prioritize your goals and develop a realistic plan to achieve them.

Specifically, an adviser can help you:

1. Understand your financial situation: A financial advisor can help you understand your current financial situation by reviewing your income, expenses, assets and liabilities. This will give you a clear understanding of your overall financial position and help you identify areas where you need to improve your financial literacy.
2. Set goals: A financial advisor can help you set realistic financial goals, whether it's saving for a down payment on a home, paying off debt, or planning for retirement. They will also help you develop a plan to achieve these goals and provide guidance on how to prioritize them.
3. Understand financial products and strategies: A financial advisor can help you understand the various financial products and strategies available, such as savings accounts, credit cards, loans, insurance, and investments. They can explain the pros and cons of each option and help you choose the right products and services to meet your needs.
4. Manage risk: A financial advisor can help you understand the risks involved in different types of investments and how to manage them. This can include a review of the risks associated with different assets classes, diversification and portfolio rebalancing.
5. Addressing complex areas: A financial advisor can help you navigate the more complex areas of financial planning such as estate planning, superannuation, pension and retirement income planning, which can be difficult for an average individual to understand.

A financial planner can also help you make informed decisions. The financial world can be complex and confusing, and it can be difficult to know where to turn for reliable information. A good financial planner will have a deep understanding of various financial strategies and services, and can provide objective advice on which ones may be appropriate for your needs. They can also help you understand the tax implications of different financial strategies and how to make the most of government benefits and incentives.

In conclusion, receiving professional advice can help you achieve your financial goals, manage risk, make informed decisions, stay on track and navigate through the complex areas of financial planning. It is often worthwhile for individuals to seek professional financial planning advice to ensure that their financial future is on a solid footing.

Conclusion

Financial literacy is very important in Australia and all developed nations. And it is vital for individuals to have knowledge and skills to manage their money effectively. The government and various organizations provide a wide range of initiatives and resources to help Australians improve their financial literacy and many of these are provided free of charge. It’s worth to spend some time in improving your financial literacy to gain control over your finances and make more informed decisions.