Greater Financial Literacy Leads to Greater Life Satisfaction, Says UoN Report
More than a third of Australians are financially illiterate, according to a recently released report from Newcastle University (UoN).
Research, which is the basis of Financial well-being and general satisfaction with life in Australiaalso found that improving financial literacy leads to better financial outcomes, which in turn lead to greater overall life satisfaction.
The survey was undertaken by UoN as part of the Financial Literacy Program with Greater Bank, with the aim of validating the need for a greater focus on the subject and financial wellbeing, particularly among young adults.
Christina Boedker, lead author of the report and a researcher at the University of Newcastle Business School in the College of Human and Social Futures, said results from a national survey clearly show the benefits of financial literacy.
“We found that only 66% of Australians can be classified as financially literate,” she explained.
“Only one in four people answered all five questions correctly.
“We also found that financial literacy has a significant impact on a person’s overall well-being, not just how people perceive their financial well-being.
“With the rising cost of living and high interest rates, it is more important than ever to have higher levels of financial literacy, supported by financial planning activities such as developing a family budget or setting long-term savings goals, as this leads to greater financial well-being.
“This in turn drives overall life satisfaction, with a regression analysis showing that people with higher financial well-being experience significantly higher levels of overall life satisfaction.
“We also found that people with higher financial literacy were less likely to experience financial hardship.”
Among key demographics, the report also revealed:
- 43% of young people aged 18 to 24 said they could not honor their personal debts;
- Young people have the lowest levels of financial literacy and financial independence of all age groups;
- Women have lower levels of financial literacy, but exhibit better financial planning behaviors; and
- Although younger men have higher levels of financial literacy, they are less likely than women to apply their financial knowledge to make good financial decisions.
Greater Bank chief financial officer Bob Moffat said the research highlighted the need for more financial education programs.
“This clearly shows that improving financial literacy can have significant benefits, so we want to make financial education accessible to more people,” he added.
“We are doing just that through the Greater Bank Finance Academy Financial Literacy Awareness Program which was developed by UoN.
“The curriculum-based program teaches students about money, saving, planning and investing, as well as the benefits and potential pitfalls of credit cards, post-pay options and other financial products.
“It is delivered by Newcastle University Student Ambassadors and Greater Bank staff to secondary school students in Hunter, the Central Coast, Mid West and Northern regions of New South Wales.
“However, it is possible that more secondary schools in these regions will get involved.
“We also see opportunities to roll out similar programs for young adults, with UoN research also finding that they are more likely to suffer financial hardship.
“Across all age groups, more than one in eight received help with financial hardship in the past 12 months, a statistic we want to improve.
“These results could potentially be reduced by improving financial literacy.”
The report is available at https://www.greater.com.au/financialwellbeing