Young Aussies have a ‘terrifying’ level of financial knowledge

The lack of financial literacy and planning skills among young Australians in high school is “terrifying” and contributes to ongoing generational poverty, an adviser has said.

Speaking to IFA Magazine, Sean Litchfield, director of Brisbane-based advice firm Comsure Financial Solutions, said the lack of high school education on financial literacy and planning skills is a catalyst for ongoing generational poverty.

“What terrifies me is, when talking to young people, how little they know about the financial world. What concerns me is the risk that each generation will hand on its poverty to the next," he said.

Financial adviser at RGM Financial Planners Paula Siddle told ifa the issue of financial illiteracy among high school students is significant.

"I have met with young individuals (not just within my job) … who do not understand that superannuation is part of their salary, or what the repercussions are if you do not pay your phone bill ... young people need to leave school understanding that there is a difference between wants and needs, budgeting and understanding contracts."

Mr Litchfield added that the partnership between advisers and schools is crucial.

“Wealth gives people choices and opportunities. If mum and dad don’t understand how money works, kids need to be able to access that information from their school and if teachers are way too busy, drag advisers like me in," he said.

Ms Siddle said, “It’s been a long while but I can always remember taking more interest in a subject or topic in high school when we had an external resource such as someone attending class to answer questions - it felt more authentic and genuine.

“Maybe being a mum I am concerned that we have an overloaded education system and I would like to do what I can if this support is required and welcomed.”

Mr Litchfield said increased adviser engagement with local school communities is key to upping the reputation of the industry.

“We have had a reputation in the past of looking out for ourselves and not particularly caring about what happens,” he said.

“Here's a great way for us to give back. A lot of us have made substantial incomes and really good strong financial lives out of our profession - why wouldn't we share this information amongst the local community?”

Larissa Waterson - Monday, 20 February, 2017

Note: Sean Litchfield is now a senior adviser with Retirewell Financial Planning.