Around 80% of Australians believe they are financially savvy but according to a recent survey, but more than one in three borrowers do not know the interest rate on their mortgage.
To us, it appears that some people may be overly confident but a lot actually have their head in the sand.
A subtle change in interest rates can make significant difference to debt repayments. Despite this, few Australians prioritise what would happen to the household budgets if there were a rate change. In the survey, people over 60 and below 30 were most likely to consider themselves to be money smart but they are least likely to know their interest rates.
The younger ones believe they are more intelligent than their peers because they draft budgets, check bank accounts regularly and pay off credit cards in full every month. However, it takes more than that; wealth-creation involves good financial decisions and being street-smart.
Unfortunately, the Gen Y borrowers and many first home buyers do not even know simple terms like fixed rate; the fine print is just as important as headlining figures.
Are you financially savvy?
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