Financial decisions are fundamental decisions which influence many of the choices we make in the short term and long term.
With ever-changing innovation, ideas, and regulations, making informed financial decisions can become difficult to navigate.
Some sobering Australian financial literacy statistics include:
Only 45% of all adult Australians are financially illiterate
The largest gap in literacy occurs in young people and women
Only 35% of all Australians know the exact value of their superannuation
This graph from the Household, Income and Labour Dynamics in Australia (HILDA) Survey shows the inequity in the rates of financial literacy of women compared to men. The HILDA Survey is the only one of its kind in Australia, and since 2001, it has followed the lives of more than 17,000 Australians each year.
In the context of complex financial markets, high levels of consumer and business debt, and the increased access to credit opportunities, these stats are problematic.
A lack of financial literacy inevitably results in struggles with saving and investing and facilitates a further inequity in wealth distribution in the longer term.
Much of this disparity has more to do with social and behavioural factors, rather than any innate ability for people to understand the world around them in the context of finance.
So how can we level the playing field?
Financial literacy means different things to different people. Understanding personal finance is different to understanding business finance, for example.
Pillars of personal finance include budgeting, saving, investing, understanding credit, and paying your bills (debt management).
Foundations of good business financial literacy include understanding the difference between income and cash flow, business planning and understanding regulations.
Luckily, we have you covered across both. Since 1999, MCP has taken the view to build financial success and facilitate strong outcomes for all people we are in contact with – financial literacy is in our DNA.
Financial literacy does take time to build, so commitment to learning is key.
MCP provides many financial resources to assist you with education, advice, and newsletters to partner with you on your financial literacy journey. We’re excited about empowering our customers to make informed decisions with mortgage finance, business finance and much more.