Financial illiteracy rampant among Aussies
Less than half of all Australians are equipped to answer basic questions on financial matters like interest rates, inflation and the diversification of risk assets, according to a business school academic.
University of Sydney's Professor, Susan Thorp, said more Australians risk making wrong decisions in areas like super investments due to lack of financial literacy.
"If you are going to manage your credit card you need to understand interest rates or you need to understand how inflation might affect the spending power of your wages and you need to understand risk if you are going to manage your superannuation investments," Thorp said.
"What we see is that people who have poor skills in this area are much less likely to have prepared for their retirement."
Thorp, who is on an Organisation of Economic Cooperation and Development (OECD) research committee on financial literacy, believes people need to develop numeracy skills in school to be financially literate, while financial institutions and regulators need to support adults to make complex decisions.
The comments come as the OECD recently joined with the International Network on Financial Education to boost global financial literacy levels.
AUTHOR
Malavika Santhebennur
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