Financial literacy is teaching about finance. It includes teaching how to budget, investment strategies, retirement planning, estate planning, debt management and compounding. 

Once you have knowledge about finance you then may need support to help improve your decisions around how to spend and make money. For example, hoarders have trouble with acquisition of goods and people who spend less time with their family and work too hard may have trouble with enmeshment with money.  Your life experiences, your past, your attitude, your knowledge about finance, motivation, stage of change, and your life stage can influence your decision making in how you  accumulate wealth and spend.

Give yourself the time and space to get to know about finance and what gets in the way of have a better relationship with money. 

Young adults are in a position to save for their future but sometimes lack the financial literacy, which in turn can affect their confidence in accumulating wealth and becoming more independent in life. 

Dwyer, McLeod, and Hodson have conducted research about this topic and found that young adults have a different perspective on debt.  For example, some focus on credit being necessary and creates opportunity while others perceive that credit will inhibit future achievements and cause a sense of powerlessness. 

Debt is known to be class stratified, according to authors Dwyer, McLeod and Hodson.  For example people with a lower income use debt to cope and people with a higher income use debt to attain wealth.  There is good debt and bad debt.  Good debt is used when the goods appreciate and bad debt is when the goods depreciate.  

Researchers suggest that some people have increased self-esteem and self-concept due to debt as it is a source to invest and reach financial wealth.  However, if a person has a lack of financial literacy can use debt incorrectly, that can lower their self-concept and self-esteem.  Therefore, the concept of a person having a sense of mastery over debt and confidence in debt and overcoming it can depend on their perception, which may be influence by the socio economic status. 

Researchers Dwyer, McLeod, and Hodson identified that young adults experience debt positively as it makes them feel in control of their money and gives them higher levels of self-esteem.  Moreover, wealthy young adults don't experience negative effects on the self-concept when in debt as they have more options to manage it. 

Debt affects young people differently, depending on their social status and options available.  For example, a person with low income and bad credit won't be able to find a loan with lower interest or consolidate their loans, while a person with high income may have those options. A person with high income may be able to fix their credit rating and have more options available.  These outcomes influence sense of mastery and self-esteem. 

The outcome means that there are several variables to consider when thinking about how a person feels about debt.  

Source: ​Dwyer, R.E., McCloud, L., & Hodson, R. (2011). Youth debt, mastery, and self-esteem: Class-stratified effects of indebtedness on self-concept. Social Science Research, 40, 727-741.

​Financial circumstances affect your mental health and your ability to improve your financial circumstances can depend on your helpful or unhelpful thoughts.  For example, some people are more dependent and don't value being financially dependent but people around them struggle as they feel it is a burden.  


As well as focusing on the quality of your thoughts it is also important to have a good level of financial literacy to improve confidence (not over confidence) and empowered to make the right decisions for yourself and know which services to access to help you along your journey. 


What is your psychology about money?  Do you enable others to be dependent on you?  Do you struggle to save?  Do you struggle to overcome gambling issues?  Do you have anxiety and depression over financial stress?  


Financial wellness is important in helping you on your journey to improving your financial circumstances.  Improving your financial literacy as well as the psychology of money can be the platform you need to start improving your ability to live the life you want. 

Behavioural finance is an important aspect to consider when learning about investment decision making and wealth management as it helps us understand the how bias can influence success and failures.
Financial crisis often has an impact on our bias just as any crisis.  The brain holds onto negative situations more than positive ones.  Think about any negative situation in your life and how your may ruminate on it more than good  memories.  Therefore, looking back at decisions you made in finance and thinking about how bias will impact on what you notice can improve discernment and what you see. 
The behaviours to watch in any situation  and especially a crisis is when fear and greed influences decisions.  Behavioural portfolio theory states that fear and greed influences investors decisions.  Fear can cause the investor to diversify their portfolio in investments that are low in risk and low in savings while greed can influence investors to diversity heavily in high risk investments in the hope of high returns.   As a result fear can cause investors to sell shares when a crisis hits as it is high risk.  However, this activity may not be helpful if your long term goal is to improve your retirement plan.  So while you notice the crisis around you and your emotions also consider your goals in your investment strategy.  
While attitude influenced the 2008 financial crisis, the financial crisis in 2020 was caused by a different nature.  However, attitude can influence how you manage it.  While emotions can guide life, you also need to look at your strategy which would include your goals and objectives  to make informed decisions when investing.   If your investment strategy is to retire well, then you need to consider your long term goals, alternatively if it to live on then it would be a short term strategy.  

There has been considerable debate about the gender gap with superannuation where females are lagging behind males.   This means that females will retire with considerably less superannuation than males.  However factors such as financial literacy, values, age can influence why the gap occurs (De Zwaan, Brimble, & Stewart, 2015).  Therefore, working with these factors may help mitigate the gender gap in superannuation.  

For example, older individuals and those with a self managed super fund (SMSF) are more engaged in superannuation (De Zwaan et al., 2015).  Financial literacy also plays a role as it will encourage the user to explore choices rather then the default option or their current one to receive a higher rate of return.   It is also important to explore how well your fund has performed to compare options.  The study conducted by De Zwaan, Brimble and Stewart (2015) found that females were less likely to understand the relationship between performance of the superannuation fund and risk and return.  

It is also argued that women tend to spend less time in paid employment as they are usually the ones to stay at home while raising their children, earn less than men (also due to part-time work while raising children) and may have less financial literacy than their male partners or men in general as they may rely on them to manage the finances.  The problem is exacerbated when separation occurs as even though superannuation may be split 50/50 there is the gap in financial literacy, getting back into the workforce after working as the stay at home mum which can result in lower income from starting at the bottom.

It is important to seek advice about superannuation, explore your options and think about your retirement early to ensure that you have sufficient funds to retire on.   I also encourage a family discussion so each member in the family as well as teenagers can learn the importance of retirement planning and become more money wise. 

De Zwaan, L., Brimble, M., & Stewart, J. (2015). ENGAGEMENT WITH SUPERANNUATION: Is there really a gender gap? JASSA, (4), 12–18. Retrieved from http://search.proquest.com/docview/1786577943/