Financial literacy – where Australia sits

If you didn't have enough money to buy something you really wanted, would you: buy the item with money earmarked for something else; borrow money from a family member; borrow money from a friend; save more money; or not buy the item?

This was a question asked of the 15-year-olds who participated in the supplementary financial literacy assessment conducted in 2015 as part of the OECD Programme for International Student Assessment (PISA).

Australia performed equal fifth in this international assessment, according to a new report from the Australian Council for Educational Research (ACER). A total of 53 000 students from 15 countries and economies participated in the assessment, including 14 530 Australian students from 758 schools.

In responding to the test question above, low performers were identified as being less likely to report that they would not go ahead and buy the item, and more likely than the high performers to report that they would try and borrow money or buy the item with money earmarked for something else. According to the report, this reflects the lack of financial understanding of this group of students. High performers in financial literacy were more likely to report that they would save up to buy the item or not buy it at all.

Writing in Research Developments, the report's lead author Dr Sue Thomson says Australian students achieved an average score of 504 points, significantly above the OECD average of 489 points but significantly lower than the average score of 526 points that Australian students achieved in the first cycle of the PISA financial literacy assessment in 2012.

‘The Australian average score was significantly higher than the United States, Poland, Italy, Spain, the Slovak Republic, Chile, Lithuania, Peru and Brazil, but significantly lower than the average score for the participating Chinese provinces, as well as Belgium, Canada and the Russian Federation,' Thomson says.

Here are summaries of the five proficiency levels on the financial literacy scale.

Financial literacy in Australia

The ACER report provides an analysis of Australian students' financial literacy background in the context of student background characteristics: Indigenous background, geographic location, immigrant and language background, and socioeconomic background.

The report shows Australian students in metropolitan schools achieved an average score of 514 points, significantly higher by 36 points (about one year of schooling) than students in provincial schools and higher by 68 points (about two years of schooling) than students in remote schools.

In addition, the average financial literacy score for Indigenous students was 411 points, significantly lower than the OECD average of 489 points and also significantly lower than the average for non-Indigenous Australian students of 508 points. This is larger than the gap between Indigenous and non-Indigenous students on either scientific literacy (76 points), mathematical literacy (70 points) or reading literacy (71 points).

Thomson says most of the difference in scores is due to the lower socioeconomic level of Indigenous students and their weaker performance in mathematics and reading. ‘Nevertheless, there is still an underlying difference in achievement in financial literacy that indicates that extra attention could be directed towards programs for Indigenous students,' she writes.

In general, the higher the level of a student's socioeconomic background, the better the student's performance in financial literacy. ‘The difference between socioeconomically advantaged and disadvantaged students was 107 points – or about three years of schooling,' Thomson adds.

Association between financial literacy and mathematical or reading literacy

ACER Chief Executive Professor Geoff Masters says students' financial literacy depends in part on their overall mathematical and reading literacy.

‘On average, for Australia, around 29 per cent of the financial literacy score reflected factors that were uniquely captured by the financial literacy assessment, while the remaining 71 per cent reflected skills in mathematical or reading literacy,' he says.

The PISA 2015: A first look at Australia's results report released late last year showed that the science, reading and mathematics achievements of Australian students were declining.

‘This report shows that financial literacy is also declining. In general, high performers in mathematics and reading are also high performers in financial literacy, while low performers in mathematics and reading are low performers in financial literacy,' Masters says.

Read the full article in Research Developments visit:

The full report – PISA 2015: Financial Literacy in Australia – by Sue Thomas and Lisa De Bortoli is available to download at

The ACER report explains that students who are below Level 2 proficiency are considered low performers in the assessment. 'Their proficiency is too low to enable them to participate effectively and productively in life'.

Activity: Click on the link to the five proficiency levels mentioned in the article. Look at the description for Level 2 proficiency. How are you helping students to develop the skills, knowledge and understanding required at this level? What opportunities are there to develop your students' financial literacy skills in subject areas other than numeracy and mathematics?