Ask the average Australian to explain the difference between an offset account and a redraw facility, and you will likely be met with silence. That is not an assumption, it is what the data consistently shows.
Multiple large scale surveys have tested the financial knowledge of Australian adults, and the results should concern anyone, young and old. A 2022 University of Newcastle study found that only 66% of Australians qualify as financially literate, with just one in four able to answer all five standard financial literacy questions correctly. A separate 2023 Allianz survey of over 1,000 adults found that only 17% demonstrated high financial literacy. The majority, 58%, rated average, and roughly a quarter rated low.
What makes this worse is the direction of travel. HILDA data from 2022 shows financial literacy has declined across every demographic group since 2016. The steepest drop is among those aged 15 to 34, the cohort that will drive retirement savings, property purchasing, and investment decisions for the next four decades.
The structural causes are not subtle. Australia's national curriculum has no mandatory personal finance subject. Most young Australians learn about money at home, which means those from lower income households inherit both less wealth and less knowledge to manage it. A Social Ventures Australia report found the government's own National Financial Capability Strategy, updated in 2022, was effectively inactive and poorly defined as recently as 2023.
The cost is not abstract. Low financial literacy is estimated to cost the average Australian household approximately $107,886 over a 10 year period, through poor borrowing decisions, underinvestment, and missed compounding.
And in this data is where the cynic in me pops up again. Consecutive Australian governments know this. They know it, and they prey on it. Because ultimately, how can the general public rise up over the sorry state of Australia's financial affairs, if they barely understand their own household budget?
Knowledge dispels fear, David Gandy.
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