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How financially savvy are Aust...

How financially savvy are Australian homebuyers?

Australian homebuyers may not be as financially savvy as they think they are, according to the results of a new survey.

Mortgage Choice has published its first ever Australian Financial Savviness Whitepaper, which reveals that 80 per cent of Australian residents believe themselves to be money smart, Domain reports.

However, more than half of the 1,043 consumers questioned for the survey admitted that their knowledge of specific financial products and regulations is actually only average or poor, suggesting that they can't actually be as money smart as they deem themselves to be.

Under-30s were found to be the most likely to class themselves as financially savvy, with over half (55 per cent) believing they are better at managing their money than their peers. Yet people in this age group were also among the least likely to know what their mortgage interest was.

Across the board, more than one-third (38 per cent) of homeowners admitted that they had no idea of their mortgage interest rate, with over-60s similarly clueless to those aged 30 and under.

Despite this, over-60s were the most likely to regard themselves as financially clued-up, with 87 per cent believing they are savvy in this area. But due to their tendency to often stick with default products or ones they are familiar with, this may not necessarily be true.

Money management habits that were common among financially savvy respondents included budgeting, paying off credit card debts in full on a monthly basis and regularly checking bank accounts to keep on top of incomings and outgoings.

Yet Marion Mays, founder of wealth advocacy firm Thalia Stanley Group, warned that this is not necessarily enough.

"Most people think being financially savvy is going to work, saving some money and being able to pay their credit card bill," she explained.

"But they don't know how to do their due diligence and make the most of their money. Knowing your interest rate is like a minimum basic. If you don't know that, you haven't really got good financial literacy or savviness."

All information provided is of a general nature only and does not take into account your personal financial circumstances or objectives. Before making a decision on the basis of this material, you need to consider, with or without the assistance of a financial adviser, whether the material is appropriate in light of your individual needs and circumstances. This information does not constitute a recommendation to invest in or take out any of the products or services provided by SMATS Services (Australia) Pty Ltd or Australasian Taxation Services Pty Ltd.

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