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Over a third of Australian adults are financially illiterate, with an 8 per cent gap between males and females, a new report has found.
AMP’s recent Econosights report has suggested that 36 per cent of Australian adults are financially illiterate and therefore lack the understanding of financial and economic concepts and the application of it to their finances, according to the business.
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After analysing market research and data (including research published by Alison Preston and Robert Wright in 2023 in the Economic Record about a gender gap in financial literacy in Australia; the Household, Income and Labour Dynamics survey in Australia (HILDA); and a 2014 Global Financial Literacy Survey from S&P), the economists at AMP highlighted the need to improve financial literacy standards.
As well as a lower financial literacy rate than the UK and Germany, the report found there was a gap of approximately 8 per cent between the financial literacy of men and women, which the organisation said could result in “poorer investment decisions, lower wealth accumulation and smaller retirement savings” for women.
Indeed, the average female superannuation balance is already about 21 per cent smaller than the average male’s balance.
AMP said closing the gendered financial literacy gap was important as female superannuation balances start behind their male counterparts from a young age. This was because they earn less, on average, and sometimes take time out of the workforce or reduce their working hours to part-time basis in order to have children.
It therefore said that the government, financial service organisations, banks, and superannuation providers should all seek to make education resources available to their customers.
It also called for the introduction of financial literacy classes in schools and greater access to financial counsellors.
AMP’s deputy chief economist Diana Mousina said: “Despite having one of the highest GDPs and average wealth per household, millions of Australians remain financially illiterate, with women well behind men.
“Lifting levels of financial literacy and closing this gender gap are important challenges for our society and would improve retirement outcomes for many.
“Underlining the importance of lifting literacy for women is that their superannuation balances remain well below men at all ages, compounded by the fact that they generally earn less than their male counterparts.”
AMP’s deputy chief economist also pointed to the implementation of measures in the Quality of Advice Review, which “should also help make affordable financial advice accessible”.
She said financial services organisations needed to play a “broader role” in providing their customers with “access to simple and intuitive information which helps them understand and engage more with their mortgages, investments, superannuation and retirement planning”.
Many mortgage brokers have been working to offer financial literacy education to borrowers, with several hosting webinars and workshops in schools and local communities to create better financial independency.
Lenders have also moved to improve financial understanding, with personal lender Salt&Lime offering rate discounts to borrowers when they complete financial education modules.
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