How to find out if your financial health score is better than the accommodation and food industry average of 51/100
Do you know how you fare against the average worker in the accommodation and food industry when it comes to budgeting, money products and understanding of financial concepts? A leading financial comparison service has designed a quiz to help us find out where we sit on the financial literacy and health scale – and have offered a step-by-step guide to improving our understanding and abilities when it comes to money.
Comparethemarket.com.au’s Financial Consciousness Quiz is a shortened 10-question test based on its recently released Financial Consciousness Index (FCI), which tests around 3000 Aussies on various aspects that make them financially ‘conscious’. More than 65,000 Aussies have taken the Financial Consciousness Quiz since it launched three years ago.
The Quiz asks 10 questions about:
· An individual’s ability to meet their money commitments
· The extent to which they have control over their finances
· Their approach to finances
· Their knowledge about interest rates vs inflation on savings
· Their knowledge of share investing
· Where individuals go for financial advice
· Personal budgets
· Personal super funds
· How often they monitor RBA rate announcements
This year’s FCI found that the average score for workers in the accommodation and food industry is 51 out of 100. This places them in the ‘Conscious’ category, which means they have decent financial capability, and are willing to make improvements to key financial matters than impact on their money.
In contrast, individuals who fail – and received a score of less than 45 – have a basic understanding of financial concepts and products, but may find it challenging to apply financial knowledge to their day-to-day financial decisions and planning. For instance, individuals who don’t understand interest rates and the concept of refinancing home loans when a rate cut occurs could pay thousands of dollars more over the lifetime of their mortgage, for merely remaining on a high-interest rate and not understanding market changes.
David Ruddiman, comparethemarket.com.au General Manager of Digital Banking, says: “Our results reveal that workers in the accommodation and food industry are on par with the Australian average. This means that these industry workers typically have a strong understanding of personal finances and are great at sticking to their budgeting goals. Regardless of how you score, it is a good idea to continuing updating your knowledge of financial products and money strategies to continue improving your financial situation. Now, more than ever, being financially well and improving one’s finances could be the difference between getting ahead or falling behind fellow Aussies during the recession.”
What your Financial Consciousness score means, and suggested improvements:
|Financial consciousness score||Suggestions to help improve your score|
|Don’t know what they don’t know (score of less than 35): You have a basic understanding of finances, but are unsure how to apply them to your personal finances.||· Take one bill or regular expense at a time and see if you could save, and still meet your needs. This could be as simple as comparing fuel prices before filling up your car.· Read user-friendly guides and how-to articles to increase your knowledge of a broader range of general financial principles and products. Comparethemarket.com.au offers the free ‘Money made Simples’ eBook which helps consumers identify their money weaknesses, and set practical goals to improve your money outcomes.|
|It’s a blur (score between 35-45): You want to improve, and better understand your personal finances but aren’t sure what to do.||· Create a budget planner to manage your spending and savings better. Comparethemarket.com.au has an easy-to-use online version that you can simply print out.· Find out which of your personal debts are good, bad or OK, to better understand which needs prioritising.|
|Conscious (score between 45-55): You arefinancially capable, but still want to improve.||· Review your financial products at least annually to ensure you are on the most competitive plan or policy.· Take an interest in the RBA cash rate announcements and what this can mean for your financial products, in particular your home loan and savings accounts.|
|Rising up the ranks (score between 55-70): You create financial goals and stick to them, and you have a strong understanding of personal finances.||· Work towards broadening your financial knowledge in relation to the economy, as well as your personal finances. For example, monitoring RBA rate announcements, learning about new financial products such as cryptocurrency, and educating yourself on stocks and investment opportunities.|
|Enlightened (score of more than 70): You are proactive and savvy with your finances, and understand sophisticated financial concepts.||· With interest rates at historic lows, you could shed thousands off your mortgage by switching to a lower interest rate home loan.· Keep going with whatever you’re currently doing! You are among the top 7 per cent of the population who have a strong grasp and understanding of your finances and the broader economic influences on your finances.|
Take the 10-question Financial Consciousness Quiz to find out how you score against your colleagues: comparethemarket.com.au/financial-consciousness/the-quiz/