December 14, 2017
More than 77% of Australians consider themselves to be ‘money smart’, new data has revealed.
According to Mortgage Choice’s inaugural Australian Financial Savviness Whitepaper, 77.2% of Australians consider themselves to be good with their money.
“Interestingly, when we break the data down into age groups, it is clear that those over the age of 60 and those under the age of 30 boast the highest proportion of ‘financially savvy’ individuals,” Mortgage Choice chief executive officer John Flavell said.
“Over 85% of those aged 60 years and over were happy to label themselves ‘financially savvy’, while almost 80% of those under the age of 30 gave themselves the same title.
“Somewhat unsurprisingly, those under the age of 30 not only considered themselves to be ‘financially savvy’, but far superior to their peers when it comes to being money smart.
“Over 55% of those under the age of 30 considered themselves to be “a lot smarter” than their peers when it came to money. At the other end of the spectrum, just 35% of those over the age of 60 said they were smarter than their peers.
“This raises an interesting question: ‘what does it mean to be ‘financially savvy’, and does the definition change depending on who you ask?’
“Well, in short, it would appear most Australians would define ‘financial savviness’ in the same way. According to the surveyed respondents, to be ‘money smart’ you need to be ‘street smart’ and have the ability to make good decisions with the money that you have.”
Looking at the data, there are a variety of different ‘financial hacks’ that self-appointed ‘financially savvy’ Australians employ.
Just over 60% of Australians who labelled themselves ‘money smart’ said they will review their finances regularly, checking their bank accounts at least once weekly.
Meanwhile, 90% of ‘financially savvy’ Australians said it was critical to take a proactive approach towards their finances by working off a drafted budget. In addition, 68% of ‘money smart’ Australians said they save more than 10% of their regular pay check and put it towards ‘rainy day’ expenses, while 68% said they thoroughly researched their financial options online before making any final decisions with their money.
Finally, 71% of ‘financially savvy’ Australians said they ensure their credit card is paid off in full each month and they actively ensure they do not take on more debt than they can easily handle.
Of course, becoming ‘financially savvy’ isn’t without its hurdles.
According to the Whitepaper, more than 1 in 3 Australians struggle to make savvy financial decisions because they are faced with too many choices.
“Choice has long been considered a ‘must have’ within financial services. In fact, we regularly put the concept of ‘choice’ on a pedestal. It is argued that an industry with an abundance of choice is strong,” Mr Flavell said.
“Yet, our data makes it clear that Australians are currently overwhelmed by too much choice. This is where finance professionals come into play. Mortgage brokers and financial advisers play an important role in helping Australians to understand the choices available to them.
“While our data found that 1 in 3 Australians feel as though their circumstances do not warrant seeing a financial adviser, 73% of those who did seek professional financial advice said their personal and financial wellbeing was improved as a direct result.
“Looking ahead, it is clear that Australians rate financial savviness as a vital life component. And while 77.2% of Australians already consider themselves to be ‘money smart’, 93% of surveyed respondents said it is critical that they continue to improve their financial knowledge.
“Of course, all this data begs the question: ‘what is so important about being ‘financially savvy’?’
“According to our Australian Financial Savviness Whitepaper, ‘financially savvy’ Australians who are smart with their money and strive to ensure each financial decision they make is the right one for their needs, are more likely to cope with not being able to work for long periods of time.
“More specifically, ‘financially savvy’ Australians are twice as likely to live a comfortable retirement and 1.5 times more likely to have emergency funds saved for those ‘rainy day’ expenses.
“In a nutshell, financially savvy Australians are more likely to be able to cope with life’s various hurdles as and when they arise. And, in today’s market, that is very important.”