Smart money, strong future: why financial literacy matters

Money touches nearly every part of our lives—from paying bills and buying groceries to saving for holidays and keeping us comfortable in retirement. Yet for many of us, managing money can feel complicated, even overwhelming.

That’s why financial literacy is so important. It empowers us to make smarter, more confident choices with our money. And the impact goes far beyond our bank accounts, with research showing that people who are more financially literate tend to experience greater overall wellbeing.

“Financial literacy is an essential life skill,” says Adnan Glinac, Executive General Manager of Life and Super at Australian Unity. “It’s about knowing how to manage your money wisely, so it supports the life you want to live.”

What is financial literacy?

Financial literacy isn’t about memorising jargon or becoming a share market expert. At its core, it’s about understanding how money works in day-to-day life and using that knowledge to make confident, informed decisions.

“It comes down to budgeting, saving and investing,” says Adnan. “It sounds simple, but these are the habits that build financial security over time.”

For example, knowing how to create and stick to a budget helps you live within your means and plan for the unexpected. Compound interest can either help your savings grow, or make your debt grow—learning how it works can put you back in control. And understanding basic investment principles, like risk tolerance and diversification, can help you build long-term wealth with confidence.

For those looking for some extra guidance, Adnan recommends the Moneysmart website as a reliable and accessible place to start building your knowledge. Run by the Australian Government, it offers step-by-step tools and guides on everything from how to do a budget to how to invest.

Because, while you may not have been taught financial literacy at school, it’s never too late to learn.

Why financial literacy matters

You might think of money as separate from health and happiness, but in reality, the connection runs deep. Financial stress is one of the most common causes of anxiety in Australia, and it’s closely linked to relationship strain, reduced work performance and even physical health issues.

No wonder, then, that research by the Australian Unity Wellbeing Index, a 25-year study conducted in collaboration with Deakin University, found people who feel in control of their finances tend to report higher levels of overall wellbeing.

“Money impacts almost every part of our lives,” says Adnan. “When we’re not financially secure, it becomes a constant source of stress, and that takes a toll on our relationships, our mental health and our ability to make decisions for the future.”

Being financially literate, on the other hand, can empower you to navigate life’s challenges more confidently. Whether it’s understanding your mortgage, setting up an emergency fund, or budgeting for major purchases, financial literacy gives you the tools to take control.

“It’s really about safety,” says Adnan. “If you feel safe with money, you’re in a better position to plan ahead, support the people you care about, and focus on what really matters.”

Small steps that make a big difference

Improving your financial literacy doesn’t require a complete lifestyle overhaul—it starts with a few simple, consistent habits.

“Don’t think of it as mastering the share market overnight,” says Adnan. “It’s about small, practical steps you can build into your routine.”

Here are some foundational habits to help you get started:

• Track your spending. Start by understanding where your money goes each month. This can be confronting at first, but it gives you a clearer picture of what you’re working with—and where you might be able to cut back.
  
  
• Create a basic budget. Use a budgeting tool, like Moneysmart’s budget planner, to break down your income and expenses. Include regular bills, savings goals and a buffer for unexpected costs.
  
  
• Set up an emergency fund. Life is unpredictable. Having savings set aside for unexpected expenses can protect your long-term goals and reduce stress. Even $20 a week adds up.
  
  
• Automate your savings. “Set up direct debits for savings so it becomes second nature—just like paying a bill,” says Adnan.
  
  
• Build your confidence gradually. Read articles, listen to podcasts and explore trusted sources like The Barefoot Investor.

“When you’re not familiar with something, it’s way harder to face it,” says Adnan. “The reality is financial literacy is an essential muscle that you have to build, and it’s learned over time.”

Thinking long term: save, invest and grow

Once you’ve nailed the basics of budgeting and saving, the next step is learning how to make your money work for you.

“Saving alone probably won’t get you to where you want to be in retirement,” says Adnan. “It’s a great habit, but if you’re not investing, you’re missing out on the power of compounding.”

Superannuation is a great example of automated saving and investing in action—showing how consistency and long-term thinking can really pay off.

But investing on your own can feel intimidating at first. That’s why Adnan recommends simplicity, consistency and clarity around your goals.

“Don’t wait for the perfect time to invest,” he says. “Regular investing, even in small amounts, adds up. The key is to make it routine.”

Some of Adnan’s tips for getting started include:

• Choosing a low-fee investment product you understand, such as a diversified fund or ETF.
• Automate a recurring amount to invest each month.
• Thinking long term (five to 10 years), and avoiding panic-reacting to short-term market fluctuations.

But before you part with any of your hard-earned cash, the most important thing is identifying your tolerance for risk and staying within your comfort zone.

“You don't have to understand everything about financial services in excruciating detail, but you need to understand what will keep you up at night,” says Adnan. “For example, if you lost 50 per cent of your investment, that might just be the risk framework of a particular investment—as in, that’s what it’s intended to do, and over a 10-year period, it might not be a problem.

“But over a one-year period, it might be a very big problem if you need the funds back. So comfort in your own risk tolerance is important.”

The bottom line: financial literacy and your wellbeing

Financial literacy isn’t just about money—it’s about mental and emotional wellbeing, too.

“When people feel financially secure, they’re better able to live the lives they want to lead,” says Adnan. “But when finances are tight or uncertain, it can cause serious stress, especially in relationships or when you’re trying to plan for the future.”

In practice, even small financial wins—like tracking spending, setting up a safety buffer, or finally tackling that budget—can positively impact your stress levels, your relationships, and your confidence.

“Learn the basics, then build on them,” says Adnan. “When it comes to financial literacy, the most important thing is to just start.”