Let’s face it, the key to mastering this thing we call “adulting” is to have a good handle on our finances.
Yet, so many of us still face the common struggle of taking control of our finances. Why? Our financial literacy isn’t up to scratch.
This is by no fault of our own. In fact, if you’re in the millennial generation or older, chances are you weren’t taught the basic concepts of financial literacy during your school years. At least, not to the extent needed to confidently manage your finances without any external help.
Maybe you’re the exception. If so, it’s likely that you were that student who took the commerce class in your final years of high school or studied a finance-related degree. I’ll put my hand up and admit, I was that student!
It wasn’t until I stepped into my wealth management class in the first year of my Bachelor’s degree that my eyes were opened to a whole new world. For the first time in my life, I was properly introduced to the concepts of superannuation, taxation and estate planning. Little did I know that I would spend the first 8 years of my career in the super industry!
From that moment, I’ve held the personal conviction that if every adult could take that same class for a semester, they’d be set for life! Of course, that’s not realistic but along the same thinking, this begs for more education.
Thankfully, we’re seeing this skills gap being addressed in schools in more recent years. The Australian Taxation Office has rolled out in-school and online educational programs for school-aged children, teaching them key financial concepts, including super and tax. Hopefully, this means the next generation is better set up for success in this area than you and I!
What does this mean for the rest of us? How do we know whether our grasp of financial concepts is enough?
Are you financially literate?
The jury’s still out on the three universally agreed on fundamental financial literacy concepts but the long list includes:
- Basic budgeting
- Calculating interest rates
- Understanding inflation
- Understanding debt and credit cycles
- Portfolio diversification
Though they didn’t make the cut, let’s also throw in basic superannuation and tax knowledge, for completeness.
Research shows that in Australia, only 55% of adults are considered to be financially literate. This means just over half of our adult population can demonstrate their understanding of at least 3 of the basic financial literacy concepts mentioned above. Are you one of them?
Compared to the worldwide average of 33% of adults who are financially literate, Australia is among the countries with the highest financial literacy rates. Even so, there’s still room for improvement! It starts with each one of us taking responsibility to educate ourselves, within our ability to do so.
After all, financial literacy is a huge factor when it comes to our financial well-being.
So, how can you improve your level of financial literacy?
Please note, any views or opinions expressed are my own and don’t necessarily reflect the position of any agency, organisation, employer or company. I don’t receive any compensation for recommendations or links included in this post.
I don’t qualify as an “expert” in the area of financial literacy. Any suggestions I make are for informational purposes only and don’t take into account your personal circumstances. They are not a substitute for any professional advice.
How you can improve your financial literacy
Whether you’re lacking confidence in the area of finances or you’re immersed in the world of finance, we’ve all got something to learn. There’s a wealth (pun intended) of resources out there for us to take advantage of.
There’s no shortage of articles being written on wealth and managing your money. Why not glean from those who have taken the time to research and share wisdom from their experiences?
It’s as easy as choosing one or two sites covering the topics you need and subscribing to their mailing list. Why constantly trawl the net to find what you’re after when you can receive it straight into your inbox?
One of my go-to sources as a millennial trying to make a living in the gig economy, is The Broke Generation. It’s easy to read, speaks my language and provides practical advice that I can implement almost immediately.
This one’s a bit tricky if you’re time-poor and juggling multiple responsibilities – I hear you and I respect you, working mother of three with constant deadlines and weekly sporting commitments! The last thing you want to do is spend any free time you have doing an online course on managing your finances. Understandable.
If you are willing to do some online learning, MoneySmart provides simple guidance as well as tools and resources to help you get started.
Did you know that on average, women’s financial literacy levels are lower than men’s? This is due to a few reasons but one of those reasons may be because there aren’t enough resources tailored to the needs and preferences of women. Please enter, Ladies Finance Club. LFC offers events, courses and webinars on budgeting and other areas to help women take control of their financial future. You can jump on the next webinar in the comfort of your living room!
If you can afford it, there’s always the option of hiring a financial adviser or planner. Don’t sit back and let them do the work with little of your involvement, ask questions. Get your money’s worth and have them answer all your burning questions!
Improving your financial literacy isn’t a quick fix. As you continue to expand your knowledge in various ways, over time you’ll notice the impact that increased awareness has on your financial habits. Start small and if you want to see long-term improvement, don’t rush the process!
Would you consider yourself to be financially literate? What steps will you take today to improve your financial literacy? Leave a comment!
Oyelola is a freelance writer based in Sydney, Australia. She works closely with entrepreneurs and businesses in financial services, consulting and education, writing quality-rich content to engage their readers and motivate action. When not writing for clients, Oyelola provides insights on writing, wealth and work on her Phrased with Purpose blog and shares her faith journey on her personal blog, He Speaks, I Write.