Starting the conversation about financial literacy

How Australians are faring

Professor Murawski outlined the OECD definition of financial literacy as ‘a combination of awareness, knowledge, skill, attitude and behaviour necessary to make sound financial decisions and ultimately achieve individual financial wellbeing.'

He then pointed out that, in the wake of the Banking Royal Commission, the topic has come under the spotlight as an area that needs considerable attention in Australia.

“Research reveals that financial concerns are often at the front and centre of Australians' list of worries. People are interacting with financial systems at an earlier age than ever before, but they are often confronted with extremely complicated decisions and large amounts of specialised information,” Professor Murawski said.

The University of Melbourne’s Household, Income and Labour Dynamics in Australia (HILDA) survey found that fewer than half of Australians could answer five basic financial questions correctly, and there was a large gender gap in the results.

While 50 per cent of men scored a perfect five, only 35 per cent of women did the same.

This is an area Proske is particularly passionate about in her role at Good Shepherd Microfinance, which offers financial programs to promote economic wellbeing for people on low incomes, especially women.

She called for a lift in basic education standards – from school and beyond.

“Customers are at a disadvantage from day one when it comes to navigating financial products. They don’t have the basic foundational education to understand the intricacies,” said Proske.

“We teach children the key principals of health and even traffic safety from a young age. Financial literacy should be taken just as seriously.”

The other panellists agreed education was a key piece of the puzzle, with West pointing out an often-forgotten factor - the low levels of broader economic understanding among the Australian population.

“Federal and State leaders speak to us about the economy. The general public is assumed to understand intricate economic concepts when they go to vote. We need to be more economically literate too,” she said.

Avocado toast isn’t the only problem

West reflected on the fact that developing money smarts is much more difficult than it has been previously.

“When we were handling cash every day, you could easily see the realities of spending and saving. In the electronic era, it’s much more abstract. The next generation of children see us tapping to make purchases, there’s no apparent money exchange at all. It’s very hard for children to learn what they cannot see,” she said.

Proske agreed and said it was easy for people to get carried away due to this invisible spending.

“It’s not spending money on avocado toast that’s the problem for young people. I’ve seen people complete 95 Uber Eats transactions over 90 days,” Proske said.

“It’s the little technology-enabled transactions that erode savings before they even make it to their savings account - from subscription services like Spotify to point of sale “buy now, pay later” platforms like Afterpay.”

Opening up the conversation          

In her role at Good Shepherd Microfinance, Proske heads up their fintech offering, Speckle, an end-to-end lending platform and social enterprise designed to improve financial resilience among its customer-base.

“We wanted to build an ethical payday lender that treats people correctly, that helps them build some skill when their economic conditions have deteriorated,” she said.

Proske pointed to the fact that money and financial matters are often seen as a taboo topic of conversation.

“Women often feel a lot of shame when it comes to money. The reality is, a lot of money problems can be practically dealt with if we open up the dialogue and demystify that fear and shame.”