Results

In 2010, the Commonwealth Bank Foundation researched people’s ability to make informed and responsible financial decisions. It found that:

• The least financially literate members of our community suffered the worst effects of the Global Financial Crisis in terms of job losses and reductions in working hours.
• Australians with low levels of financial literacy are vulnerable to financial stress and less likely to believe they can change their own financial situation.
• Poor financial literacy goes hand in hand with difficulty in meeting regular commitments such as phone or power bills.
• Age and education levels are powerful indicators of financial literacy. Young people and those studying or unemployed are most vulnerable.
• Annual personal and household income was related to financial literacy – it was likely that the higher a person’s financial literacy score, the higher their annual income.

 

Profile of the least financially literate

The research found that people with financial literacy levels in the lowest 25 per cent were more likely to:

• Young people – 16-25 year olds comprised 42% of the bottom quartile.
• Unemployed or studying – Unemployed workers and students are likely to have a lower level of financial literacy.
• Low income earners – The lowest levels of financial literacy were among participants earning less than $30,000.
• Poorly educated – 49% of the bottom quartile indicated that ‘any high school’ was their highest level of education.
• Non-English speakers – 12% of the bottom quartile indicated that English was not their main language spoken at home.

 

Sources of financial knowledge

• The more financially literate participants are more likely to use a wider variety of financial information sources than those with lower literacy scores.
• The majority (79%) of our participants use a ‘trial and error’ approach to managing their money, relying more on experience than quality information.
• 68% of respondents claimed their parents as a source of information on money matters. Surprisingly, participants who rated their parents as having poor money management skills had significantly higher literacy scores than those who felt their parents were good at managing money.

The relationship between financial literacy and school was significant. 39% of respondents said they received their financial knowledge at school.

This suggests that school is one of the most appropriate places to teach people financial literacy skills so they can make informed decisions on financial matters.

The report also found individuals and the entire economy could achieve significant economic benefits from improved financial literacy.

 

Download reports

• 2010: Improving financial literacy: benefits for all Australians (PDF 1.05MB) 
  

Previous Reports

• 2004: Key findings (PDF 318KB)
• 2004: Research report (PDF 604KB)