Students' low financial literacy makes understanding fees, loans, debt difficult

August 4, 2015 The Conversation

Financial literacy in Australian is low, particularly so in those under 25 years of age. What might be surprising is that it is low even among university students.

Recently I was part of a research team that undertook surveys of students from across Australia aged 17-20. Students were asked to rate their understanding of different areas of financial importance: budgeting, saving, managing debt, investing, retirement planning, tax, insurance and superannuation.

They were then asked to answer some basic questions related to each of those areas, with some interesting results that are yet to be published.

Students overall rated their understanding of budgeting and saving reasonably high, but that didn’t translate into actually being able to apply that knowledge. While 55.4% considered themselves to have a high understanding of budgeting and 66.7% a high understanding of saving, only 4.4% were able to correctly answer how long it would take to save a certain amount given a budget with income and expenses.

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Laura de Zwaan | Lecturer, School of Accountancy, Queensland University of Technology

Laura de Zwaan is an associate member (non-practising) of the Financial Planning Association and a member of the Financial Planning Academics Forum.

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