Financial decisions are fundamental decisions – they influence many of the choices we make in the short term and long term.
Many of the agents within our economy have little understanding of how to manage finance, despite being immersed in it every day. With ever changing innovation, ideas, and regulation - making informed decisions becomes more difficult.
The pandemic is a generational event, that has revealed a great deal about Australia’s financial literacy. Some sobering statistics include that:
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
Inequity in the rates of financial literacy of women against men. Source: HILDA.
In the context of complex financial markets, high levels of consumer and business debt, and the increased access to credit opportunities, this is problematic. This is not to mention the added variable of COVID-19 constantly destabilising economic growth and income.
A lack of financial literacy inevitably results in struggling with saving and investing and facilitates a further inequity in wealth distribution in the longer term.
A lot of this disparity has more to do with social and behavioural factors, rather than minorities innate ability 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 – the knowledge base for managing personal and business finance is very different.
Pillars of personal finance include budgeting, saving, and investing, understanding credit, and paying your bills. The foundations of good business financial literacy include understanding the difference between income and cash flow, business planning and understanding regulation.
Luckily, we have you covered across both.
Since 1994, MCP has come together with the joint view to build financial success and facilitate strong outcomes for our people – literacy is in our DNA.
Financial literacy does not come overnight. Over the next few weeks, MCP will be publishing articles with education, advice, and updates to kickstart your journey into financial literacy. We’re excited to take you with us towards making empowering and informed decisions with both your personal and business finance.
More information?
E: enquiry@mcpgroup.com.au
P: (03) 9620 2001
W: www.mcpfinancial.com.au