Gen Z enters the financial world before having complete understanding of financial concepts. Young people open bank accounts, receive wages, accumulate superannuation and make decisions about saving, credit and investing while many are still at school or beginning work.

Australia has a substantial financial literacy gap, particularly among young people and young women [1]. School students may recognise terms such as interest, inflation, insurance and superannuation without fully understanding how they work in practice [2].

Financial learning commonly happens at home, through mathematics or in Business Studies [2]. Stories and realistic scenarios can make financial concepts easier to understand [2]. Yet not every parent has the knowledge, confidence or circumstances to provide detailed financial guidance. Young people therefore enter the same financial system with very different levels of preparation.

The environment they enter is also becoming more complicated. Digital banking, buy now pay later services, social media, micro-investing, scams and AI-generated information expand both access and risk [3]. Participation can happen quickly, while understanding takes longer.

Financial products are different from everyday products

Because they involve long term contractual commitments and high switching costs. A home loan, car loan or superannuation account can remain part of someone’s life for decades, with fees, interest rates, values and conditions changing over time. The relationship does not end at the point of purchase. Service provision continues throughout the life of the product.

Financial products are also comparison intensive, requires high involvement during any decision made on the product. For instance, two difference bank offers may appear similar while they would differ in terms of fees, interest rates, eligibility rules, insurance, penalties and long term returns.

Loan products are usually a means to an end. People do not want to own a mortgage for its own sake. They want a home….

Some financial products are also almost unavoidable. People need a bank account to receive wages and superannuation begins with eligible employment.

This combination of complexity, long term engagement, distance, and near-mandatory participation leads to an imbalance. Financial institutions approach these products with extensive technical, legal and commercial knowledge. A young person may approach the same product for the first time without knowing which questions to ask.

Our research suggests that product usage, in other words, engagement and inclusion in the financial world begin before completely knowing what the products involve.

Financial literacy is multidimensional

Including knowledge of basic and complex financial concepts, as well as financial experience, behaviour, confidence, skills and attitudes.

It reflects whether a person participates in the financial system, how they manage money, where they look for information and how capable they feel when decisions become unfamiliar or complicated.

In our 2026 Youth Financial Literacy Index study, we combine 30 indicators across four dimensions: financial knowledge, financial inclusion and experience, financial behaviour, and financial confidence, skills and attitudes.

We conducted an online survey with 1,000 Australians aged 14 to 25. We created the measure primarily on the OECD/INFE framework and adapted to reflect young people’s stage of life.

The average Youth Financial Literacy Index score is 56 out of 100.

According to our classification, 58% of respondents sit in the medium literacy segment, with scores between 50 and 79. 31% are in the low segment, with scores between 0 and 49, and 11% reach the high segment, with scores between 80 and 100.

Young people generally understand concepts that are more familiar in everyday life. 84% understand inflation, 74% recognise the relationship between investment returns and risk, and 67% answer the compound interest question correctly.

Knowledge becomes less consistent across more complex financial systems and emerging finance. Across four retirement and superannuation questions, correct responses range from 18% to 63%. Correct responses are also lower for digital forms at 46% and cryptocurrency at 51%.

Interestingly, high literacy segment performs higher across the knowledge measures compared to lower segments, but the differences are not significant. The most significant differences are seen in their broader engagement in financial world. They have stronger financial behaviours, skills and greater confidence. For instance, high literacy segment is more likely to own superannuation (53%), stocks and shares (45%) and cryptocurrency (30%). They are also more likely to use budgeting app (22%), feel less financial stress and feel capable when making financial decisions that are unfamiliar or complicated.

Can young people simply learn as they go?

As consumers, we rarely prepare extensively before using a new product. Research shows that most customers do not read manuals, and younger consumers are particularly unlikely to do so [4]. Instead, we usually begin using a product, explore its features and seek guidance when they encounter a problem.

For a lot of everyday products, this approach is understandable. People can learn to use a phone, software platform or video game through experimentation. A mistake may be frustrating, but it is usually immediate, visible and relatively easy to correct.

Learning to use a financial product through trial and error can have very different consequences. Mistakes may result in fees, debt, lost returns, unsuitable insurance, missed opportunities or long term financial stress. The impact may not become apparent until months or years after the original decision.

Our research suggest that young people may be approaching financial products in much the same way as other products. They begin using them and develop knowledge through experience. They hold accounts, use banking apps, receive superannuation and invest while their understanding of some of the systems behind these products is still developing.

The concern is not that young people are unwilling to learn. Financial products allow, and sometimes require, participation before consumers have developed the knowledge needed to use them confidently.

Traditional manuals are unlikely to solve this problem. Young people need accessible guidance connected to the moment when a financial concept becomes relevant.

How can we support young people at the right moment?

We need to understand young people’s journeys into the financial world more clearly.

A young person’s financial journey includes a series of important moments: opening a first account, receiving a first wage, reading a first payslip, accumulating superannuation, completing a tax return, considering credit and making a first investment.

A human-centred approach begins with these moments rather than with the structures of individual organisations. It asks what young people are trying to achieve, which decisions they face, what they understand, where they look for information and when they are most ready to receive support.

Understanding young people’s financial journey could help educators, employers, financial institutions, parents, community organisations and policymakers identify where guidance is currently available and where young people are being left to learn alone.

Young people do not need one financial literacy lesson or a manual they are unlikely to read. They need continuous support across their financial journey, delivered by trusted people and organisations at the right time, in the right place and in a form they can apply.

Young people are already in the financial ocean. Learning to swim requires instruction, experience, confidence and a safe environment. Supporting financial literacy requires us to understand the journey and be there before a difficult decision becomes a lasting consequence.

 

 

References

  1. Keary, C. (2025). Financial Literacy: The Key to Younger Generations Being Able to Manage and Grow Wealth. Australian Shareholders’ Association.
  2. de Zwaan, L. and West, T. (2022). Financial Literacy of Young Australians.
  3. Russell, R., Reid, M., Barrow, A., Kutin, J. and Madani, F. (2026). Australia’s Financial Wellbeing: An Integrated Approach. Wellbeing Research and RMIT University.
  4. Blackler, A. L., Gomez, R., Popovic, V. and Thompson, M. H. (2016). ‘Life Is Too Short to RTFM: How Users Relate to Documentation and Excess Features in Consumer Products’, Interacting with Computers, 28(1), 27–46.