How financially conscious are you?

Just being financially literate won’t cut it anymore; it’s all about the awareness of your own power to act on your knowledge and influence your own financial future.

According to the Financial Consciousness Index, developed by comparethemarket.com.au and Deloitte Access Economics, most Aussies barely scrape a pass: on average, Australians score 51 out of 100.

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The Index is based upon an individual’s financial literacy, as well as their capability and willingness to act on that knowledge.

Those who scored under 35/100 were put in the ‘Don’t know what they don’t know’ category, and a score between 35-45/100 landed you in ‘It’s a blur’.

If you score between 45 and 55 you’re ‘Conscious’, while 55-70/100 puts you in the ‘Rising up the ranks’ category. Those who scored over 70 were considered ‘Savvy and enlightened’.

Who scored what

A number of factors – such as age, income, gender, location, education and owning your own home – played a hand in an individual’s result.

According to the report, women scored slightly lower than men (49/100 and 53/100 respectively).

“With FCI scores, the gender gap rears its head,” the report said.

“Although not far apart, these differing scores reflect a range of inherent social and economic factors which mean women have different financial prospects and sense of control compared to men.

“Women are less likely to work full-time, have less superannuation and are more likely to be underemployed – all contributing factors to a lower financial consciousness.”

Where you live matters. By state, those living in the ACT scored highest with a score of 52.5, followed by NSW (52.4), Victoria (50.4) and finally South Australia and Tasmania in joint last place (49.9).

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If you earn more, it’s no real surprise that you’re likely to be more financially conscious. Those whose income fell under $40,000 a year had an average score of 45, while those raking in more than $190,000 scored 63 on the Index.

But it turns out that even the highly educated aren’t necessarily the more financially conscious: postgrads scored 57 out of 100 on average, demonstrating that Australians’ grasp of financial concepts overall leave something to be desired.

Comparethemarket.com.au’s general manager of banking Rod Attrill noted the “clear relationship” between an individual’s score and their financial wellbeing.

“Over half (55 per cent) of Australians with the worst financial capability score said they have struggled to pay their household bills at some point.

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“There is also ongoing concern about holding down a job, with 38 per cent of respondents saying they either worry or feel very little job security,” he said.

Attrill also told Yahoo Finance that low financial consciousness was often not due to low financial literacy, but rather a low prioritisation of managing their finances.

“This may be because they have other things on their mind (work, family or friends) or because of their life circumstances (you’re less likely to care about interest rates if you don’t have a mortgage).

“We also found that switching products to try and save can be viewed as too complex, too scary or too high risk in case they make the wrong decision, which discourages people from taking action in order to improve their financial position,” he said.

He also encouraged people to educate themselves through free resources as well as proactively prioritise improving their financial wellbeing.

Understanding people’s financial consciousness also made for better-informed public policy-making, Attrill added.

“If people do not feel empowered or able to improve their financial situation, then this has obvious effects on the economic health of the nation as a whole.”