Issue rises for the sixth straight quarter
A concerning number of younger Australians are grappling with lower financial literacy levels, exposing them to a higher risk of financial hardship, new NAB research has revealed.
NAB’s Financial Hardship survey showed that despite 75% of Australians believing they possess “good” to “excellent” financial literacy, the number of people reporting some form of financial hardship in the last three months has increased for the sixth consecutive quarter, reaching 44%.
Michael Chambers (pictured above), head of customer vulnerability at NAB, said many people are just one unforeseen life event away from experiencing financial hardship.
“While NAB customers are broadly in good shape, one in four Australians say they don’t have enough money for an emergency,” Chambers said in a media release. “With rising interest rates and the increased cost-of-living, people’s financial literacy and understanding of their financial situation is being tested.”
He said financial literacy goes beyond budgeting, encompassing effective credit card management and making informed decisions on significant purchases.
“Research shows that people being over-confident in their financial understanding can be just as problematic as not having basic knowledge in the first place,” Chambers said.
NAB data showed that men aged 50-64 (82%) and women more than 65 years old (81%) reported the highest levels of financial literacy. The biggest gap in financial understanding was seen among women aged 18-29, with 31% rating their financial literacy as “fair” or “poor,” significantly higher than any other demographic group.
Encouraging financial literacy
NAB has undertaken initiatives to support customers facing financial hardship, offering tools and support options through NAB Assist. These include loan restructures, referrals to financial counselors, and access to no interest loans through a partnership with Good Shepherd.
“The most important thing to remember is there is no such thing as a silly question when it comes to finance,” Chambers said. “Banks have an obligation to explain things in simple language so people should feel confident about asking as many questions as they need until they feel comfortable.
“There is also a huge amount of information out there these days from podcasts to online budgeting tools and books – I’ve kicked things off with my kids with ‘The Barefoot Investor for kids’ and it’s been a great start.”
Over the last three months, 1.5 million customers have actively reviewed their spending categories using the NAB app and internet banking, a 62% rise compared to the previous quarter.
For more information on financial support, visit NAB’s support page.
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