Our research - Corporate Responsibility

Significant findings of the research included:

• strong motivators are needed to overcome a 'preference for the immediate' and encourage people to save
• personal support is a major driver of success
• linking savings goals with an emotional driver like saving for a child's education offers a powerful motivation for participants to succeed in reaching their savings goal.

The 2008 ANZ Financial Literacy Survey was overseen by a steering committee that included representatives of ANZ, ASIC and the Victorian Consumer Credit Legal Service. Here are some of the survey's key findings for Australia:

Financial literacy is strongly associated with a person's age, gender, education and socio-economic characteristics. The lowest average levels of financial literacy are associated with:

• people educated to Year 10 level or lower
• people whose main source of income is a Government benefit or allowance, or who are in unskilled work
• people with household income under $25,000 per annum
• people at both extremes of the age profile (under 24 or over 70)
• females, especially females over 70 years of age
• people who speak a language other than English at home
• people of Aboriginal or Torres Strait Islander descent.

There is a pronounced difference in financial literacy levels between the most financially literate (top 20 per cent) of the Australian population and the least financially literate (bottom 20 per cent). Most of those in the lowest financial literacy group are responsible for the financial management of their household yet their behaviour shows:

• greater exposure to risk through less use of insurance and lower levels of understanding of the relationship between risk and return
• less use of cost-effective ways of transacting
• less shopping around to get the best deals on mortgages
• fewer people taking steps to minimise their everyday banking fees
• lower awareness that the primary credit card holder is responsible for all debt on the card.

There are also some areas of money management and financial products that are not as well understood as they should be:

• many consumers do not understand some fundamental aspects of investment including risk and return and the importance of diversifying investments
• many consumers do not understand that an insurance company can refuse a claim if questions are not answered accurately when taking out or renewing a policy
• almost one in two people who have superannuation either do not read their super statements or read them but say they are too difficult to understand
• compared with the first study in 2002, the 2008 findings show encouraging signs such as:
• more people saying they are trying to save regularly
• while still too low, some increase in awareness of an investment that is 'too good to be true'
• greater use of electronic transacting channels, particularly Internet Banking.

The core issues identified by this research as causing financial difficulty are:

• 'unhealthy' ways of thinking about finances including 'living for today', 'financial disengagement' and 'aspirational' spending
• circumstances or events outside people's control such as job loss, poor health and relationship breakdown
• very low financial skills and knowledge which disproportionately impacts many of the most vulnerable in the community.

The 2004 study of Financial Exclusion by Chant Link and Associates showed that:

• around 120,000 people, or 0.8% of Australia's adult population, could be considered totally excluded with no ownership of financial products
• around six per cent of adults have minimal financial access, owning only a transaction account
• risk factors influencing financial exclusion include unemployment, poverty, disability or long-term illness and low education levels
• factors causing long-term financial exclusion include financial illiteracy, learned dysfunctional credit or savings behaviour and intergenerational exclusion
• special factors affect Indigenous Australians who are the only ethnic group in Australia consistently associated with financial exclusion.