Improving your money management skills can help with relieving financial stress.
Nearly one in three Australians are financially stressed, with damaging effects on mental and physical health, together with social relationships. This information was found in the Financial Mindfulness Financial Stress Survey commissioned in July 2017. Lack of Financial Literacy skills played a major role.
Financial stress is felt across the community. People with salaries of up to $150,000 and investments of up to $750,000 were only marginally less financially stressed than those who earn up to $90,000 and with investments of up to $350,000. While over commitment to debt is a major cause, change in personal circumstances can also have an unexpected role.
Where the primary breadwinner, is unable to work through accident or illness, the family is usually unable to meet their loan repayments. However, this type of financial stress is avoidable where adequate income protection has been put in place. People often don’t appreciate the consequences until it is too late.
The general consensus of research about financial stress is the lack of financial literacy skills is a major contributor to people making unwise financial decisions.
Australian Financial Literacy scores have been proven to be extremely low
More than 50% of Australians couldn’t answer a simple set of five questions asked by Melbourne of University researcher for the HILDA Report.
I have read the questions and believe me they were simple.
If you want to take the test, you will find the questions at the end of the article “Financial understanding reaching ‘dangerous levels after embarrassing test results’.
It is not surprising the standards are so low when our education system does not include any curriculum for financial literacy at any level of education. Lack of this very basic financial knowledge may be leading people to make poor financial choices which result in poor financial outcomes.
ASIC’s MoneySmart – Financial Literacy Website
ASIC’s MoneySmart website has over the last couple of years developed an extremely good resource for all Australians. I constantly recommend this site as the first reference point any consumer should go to when they want to get unbiased advice on any matters financial.
However, I think people tend to use this when they are looking for a specific piece of information, rather than using it to improve their general financial knowledge.
As part of my research, I did a few Google searches for the topic of Financial Literacy. Here are some of the answers to my Google questions. It makes compelling reading:
Who Needs Financial Literacy Skills
The lack of financial literacy can lead to owing large amounts of debt and making poor financial decisions. For example, the advantages or disadvantages of fixed and variable interest rates are concepts that are easier to understand and make informed decisions about if you possess financial literacy skills.
Why Financial Education is Important in Today’s World
Financial education is important in today’s world. Any improvement in financial education will have a profound impact on your ability to generate abundant wealth and create a sustainable future. It is never too early or too late to improve your financial education.
Can Financial Issues Impact a Person’s Well Being
Money and Financial Issues. Money and financial issues can be significant sources of stress for people. A person’s problemswith money may produce such overwhelming negative feelings and self-criticism that his or her mental and physical health can be adversely affected.
Employers can provide a free Financial Literacy Program with the help of Financial Mappers and MDTConnect
Malcolm Williams of MDTConnect is passionate about the importance of Financial Literacy. He is working with Financial Mappers to provide a financial literacy program for Employers wanting to improve the financial skills of their employees. The same program is being used by organizations who also want to improve the financial literacy skills of their members.
The program will include these topics:
- Your Finances – The Basics
- Lifestyle Goals and Financial Targets
- Debt Management
- Passing the HILDA Questionnaire
- Preparing for the Unexpected
- Investments – The 3-Major Types
The aim is to introduce basic financial concepts, giving each person the opportunity to absorb that one concept and decide if that information is relevant to their current financial situation. No specific advice is given, and no financial products are recommended.
Please reach out to Malcolm for more information about the program.
Glenis Phillips SF FIN – Designer of Financial Mappers