Improving financial literacy in youth could deliver not only long-term economic returns, but significant social benefits
Sydney, 11 June 2025 – Despite rising levels of income and wealth in Australia, around 37% of adult men and 52% of adult women still do not understand key financial concepts like interest rates, inflation, and risk diversification (HILDA report).
The long-term benefits of financial literacy — especially from early education — have not been well quantified to date, limiting evidence-based decision-making for policymakers. However, new analysis from Frontier Economics, commissioned by Kids Get Money, reveals substantial potential benefits — including equity and social gains — from improving financial literacy in teen years.
“Financial capability has far-reaching implications beyond personal finance — it can influence everything from public health costs to the long-term sustainability of government support programs – such as the hardship assistance scheme expenditure,” said Alexandra Humphrey Cifuentes, Economist at Frontier Economics. “This analysis provides a clearer picture of the potential public and personal value from investment in financial education.”
The report, “Making Cents of It: The Benefits of Improving the Financial Literacy of Australian Children” identifies several key economic and social benefits linked to stronger financial literacy, such as higher productivity, improved retirement planning, and better mental health outcomes.
The report also provides illustrative estimates across two indicative case studies related to potential reductions in public spending on hardship assistance programs and reduced health service usage related to improving financial literacy. Whilst there is an inherent delay in the timing of improvements in financial literacy (especially for programs targeting childhood financial literacy), and improvements in broader economic and social outcomes, the two indicative case studies found that:
1. Reduced Health Service Usage
Better money skills reduce financial stress, improve decision-making, and encourage proactive health measures — like investing in private insurance and preventive care. The analysis indicatively estimates that if financial literacy nationwide were instantaneously lifted to a perfect score on the ‘Big Five’ financial literacy questions, hospitalisations of Australians aged 65 and over could fall by 900,000 per year. This translates to annual health savings of $9 to $11.6 billion, or $76.27 billion over a decade (present value, discounted at 7%).
2. Reduced Hardship Assistance Costs
If financial literacy across the population were instantaneously lifted to a perfect score on the ‘Big Five’ financial literacy questions, the Commonwealth Government could potentially benefit to the tune of around $1.04 million per year, or $7.80 million in present value terms over 10 years (discounted at 7%) via reduced spending on its Financial Wellbeing and Capability program.
“Investing in childhood financial literacy is not just a moral imperative — it’s one of the smartest, most scalable investments we can make in Australia’s future,” said Annette Rose, Founder and CEO of Kids Get Money. “Every dollar spent on improving financial capability has the potential to save billions in future healthcare, welfare, and social costs.”
The full report is available here
Media enquiries:
Kids Get Money
Annette Rose
Founder & CEO
Email: hello@kidsget.money
Phone: 0458 220 886
Website: www.kidsget.money
Frontier Economics
Priyanka Nadkarni
Marketing Advisor
Email: media@frontier-economics.com.au
Website: www.frontier-economics.com.au
Alexandra Humphrey Cifuentes
Economist
Email: alexandra.cifuentes@frontier-economics.com.au
Phone: +61 407 705 728
Website: www.frontier-economics.com.au
