A better sense of financial literacy, in particular a better understanding of the differences between consumer and investment debt would go a long way to helping ease the financial worries of Australians.

According to a recent survey from mortgage broking firm Mortgage Choice, just under half of the Australian population are regularly worried about their finances.

According to the Mortgage Choice Survey, 42.9% of Australians worry about the finances regularly, while 27% are uncomfortable with their current financial situation.

Simon Buckingham, director of investment advisory firm Results Mentoring, said its’s no surprise that people worry about their finances, but that is being made worse by a poor understanding of all things money.

“Everybody worries about money. But I think a big part of that is a lack of education about money. We’re not taught about how to manage money in school,” Buckingham said.

“We have very little education on financial literacy as part of our curriculum. At best you might be taught how to balance a cheque book or open a savings account,” he said.

Buckingham said with a better understanding of how debt can work for them, people may be able to put themselves in a position to reduce their financial worries.

“They’re not taught to distinguish between the use of debt for consumption versus the use of debt for investments and the idea that when you invest there’s a potential cost of funds to money, but if you can achieve, with managed risk, a better return a better return than the cost of those funds then you’re actually getting ahead,” he said.

“I’m not a huge fan of people leveraging themselves up to the hilt and pushing themselves to where they’re under constant financial stress to manage their debt. The efficient and sensible use of debt for investment purposes has a very real place, but the problem is people aren’t taught how to do it.”

For many Australians, the largest form on consumer debt they take on would likely bye the mortgage on their own home, but Buckingham said with a better understanding of investment debt they may be able to put themselves in a position to reach the Australian dream without the associated financial worry that can come with that.

“It makes sense that people want to pay down their home because they’re dealing with the more dangerous form of debt, which is consumer debt, it’s not income producing debt. Yes your home is an asset that’s going to appreciate in value, but it’s not something that’s going to feed you in the absence of you have other income.

“If you look at investment debt, if it’s managed carefully to help you build your wealth then it might actually help you to pay down your home faster.  You might not to elect to buy a home outright and to put your efforts in to building wealth to get to the point where you can buy a house with cash and then not have that worry about how you’re going to fund the mortgage

While he said there does need to be better education around how debt works, Buckingham said he has seen some of the younger generations show an appreciation for how debt can help them.

“With interest rates being at the level they are today and the similar cost in making repayments on a house and paying rent, you get people, particularly younger people who might choose to buy a home that is not their dream home, but they’re smart and choose an area that is predisposed to growth and it might be a property that has the opportunity to increase its value through renovating or subdividing.

“They take a lifestyle compromise, but that’s in order to build their asset base faster by treating their own home as an investment.”

For those who aren’t so young, Buckingham said it’s never too late for them to take a step towards less financial worry either.

“We’ve had people come to us that are tens of thousands of dollars in consumer debt due to credit cards or that sort of thing and go through a process of systematically eliminating that through to getting underway in their investing and even investing in small developments in less than 24 months.

“The key is getting people to accept and take responsibility for the financial situation and habits and taking the steps to fix those. People don’t have to become monks and live on two-minute noodles, it’s just about being more committed about your financial situation and everything associated with that."