The government in Australia is promoting the cause of Australian financial literacy. This concept is the ability to make informed judgments about effective decisions in relation to managing money. Other countries that are getting involved include New Zealand, Japan, the United States, and the United Kingdom. In Australia, one specific organization that is promoting the cause of financial literacy is the Australian Securities and Investments Commission, or ASIC. The purpose of this commission is to protect financial consumers by educating them about the financial system. The Organization for Economic Cooperation and Development (OECD) is an inter-governmental project that was launched in 2003. Its objective is to provide improvement in financial education and literacy.
According to OECD, the financial literacy foundation in Australia is succeeding in bringing community awareness of Australian financial literacy through the ?Understanding Money? initiative. This scheme includes an informational website, research opportunities for financial literacy issues, and chances for Australians of all backgrounds to learn more about how to manage their finances and even potentially start their own hedge fund or hire CFO services. They can do so through a number of venues including school, through vocational learning, in the community, and in the workplace. There is also a great deal of collaboration with overseas organizations that are similar to those found in Australia. The purpose of collaborating in this way is to share knowledge and learn from one another.
A Commonwealth Bank Foundation conducted a study of Australian financial literacy and its impact on the economy and in social realms. The main purposes were to explore the ability people have to make responsible and informed financial decisions, and to examine the relationship of financial literacy and its impact on each person as they learn how to manage their money. The result of the research was a profile of Australians who began with very low levels of financial literacy. As they benefitted from learning about financial literacy, they were able to become valuable assets to the Australian economy.
Part of the reason there has been such a focus on Australian financial literacy is that people do not seem to know how ignorant they are about money until given a real life situation to solve. A study conducted in 2005 showed that while 67% of participants in the study said they understood compound interest, only 28% were able to solve a problem to prove they had a solid level of understanding. Hence, the importance of teaching financial literacy to the inhabitants of Australia and around the globe is clear.