Quiz: how financially literate are you?

The final report from the banking royal commission has shifted focus to the financial literacy of everyday Australians, and how banks may have historically taken advantage of a general lack of knowledge.

It’s estimated that less than half of the country’s population has a basic knowledge of finance, and how it all works.

In 2016, Annamaria Lusardi and Olivia Mitchell developed a financial literacy test as part of the Household, Income and Labour Dynamics in Australia (HILDA) survey and put it to 17,500 Australians.

Take the test to see how you stack up!

“Forty per cent. That’s the proportion of Australians who seem to have a good grasp of basic concepts,” HILDA’s deputy director and author of the survey’s financial literacy section Professor Roger Wilkins said.

The gap seemed to be most magnified between genders, with about 50 per cent of men answering all questions correctly, compared to 35 per cent of women, he told The New Daily.

Whether that’s because men seem to take a greater interest in gambling, sport and the stock market, which all require an understanding of financial literacy, or because traditional gender roles continue to steer women towards looking after the household and men the finances, Professor Wilkins said it can be overcome with some effort.

“It’s a sociological phenomenon rather than an ability,” Professor Wilkins said. “There’s no reason to think women should be less able to understand financial concepts than men.”

Studies also show that older people are generally more financially literate than younger generations.

“As you’re older, you have more money and tend to need to understand financial concepts to manage your wealth,” he said.

First published on www.thenewdaily.com.au and republished with permission from The New Daily. For the full article visit The New Daily website.