Young Australians are the only age group whose thinking scores are falling

Something is happening to 15 to 24-year-olds.

The latest annual Household, Income and Labour Dynamics in Australia (HILDA) Survey found that between 2012 and 2024, the cognitive ability scores of 15 to 24-year-olds declined – the only age group to experience this drop.

In a task that tests the strength of their working memory, out of a possible score of seven, 15 to 24-year-olds fell from a score of four in 2012 to 3.8 in 2024.

In another task that indicates brain processing speed, out of a possible 110 points, this age group’s scores also fell – from 55.4 in 2012 to 52.7 in 2024.

In other age groups, these cognitive scores remain fairly constant.

Cognitive ability shapes a lot: whether people find work, how well they do their jobs and their chances of promotion and higher pay.

Higher cognitive ability is also linked with higher financial literacy and financial wellbeing.

So, the falling scores among teenagers and people in their early 20s are concerning.

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What it means for future financial security

The HILDA Survey follows the lives of more than 17,000 Australians each year over the course of their lifetime, collecting information on many aspects of life in Australia including household and family relationships, income and employment, health and education.

Based on data collected in 2024, the latest survey confirms what earlier ones found.

Cognitive ability tends to decline with age, and the slide steepens once we've blown out the candles on our 50th birthday cake.

Take the HILDA financial literacy survey

1 point each

Question 1

Suppose you put $100 into a no-fee savings account with a guaranteed interest rate of 2% per year. You don’t make any further payments into this account and you don’t withdraw any money.
How much would be in the account at the end of the first year, once the interest payment is made?

Answers for question 1

$100.20

$104

$120

$102

Question 2

Now imagine that the interest rate on your savings account was 1% per year and inflation was 2% per year. After one year, would you be able to buy more than today, exactly the same as today, or less than today with the money in this account?

Answers for question 2

More

Less

Exactly the same

Question 3

Do you think that the following statement is true or false? ‘Buying shares in a single company usually provides a safer return than buying shares in a number of different companies.’

Answers for question 3

False

True

Question 4

Select whether you think the following statement is true or false: An investment with a high return is likely to be high risk.

Answers for question 4

False

True

Question 5

Suppose that by the year 2028 your income has doubled, but the prices of all the things you buy have also doubled. In 2028, will you be able to buy more than today, exactly the same as today, or less than today with your income?

Answers for question 5

Exactly the same

More

Less

Research already links weaker cognitive skills – for example, a less sharp working memory or slower processing speed – to lower financial literacy and poorer financial wellbeing.

The latest HILDA results support this. Among 15 to 24-year-olds, those who scored poorly on the cognitive tasks also struggled with some basic but important financial concepts.

When asked five questions on things like how inflation eats into purchasing power, whether spreading investments lowers risk and whether a high return usually means high risk, only a third of 15 to 24-year-olds answered them all correctly.

Around 18.9 per cent of 15 to 24-year-olds got only one or two right, almost double the number of 25 to 34-year-olds and over-65s who did as poorly. People aged 45 to 64 answered the most correctly.

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The Survey results suggest that a high level of education goes hand in hand with higher cognitive scores.

That doesn't mean people with degrees are more intelligent, though. It means they tend to do better on the specific tasks the HILDA survey measures.

People who aren't in paid work tend to score lower too, although that may be because they're often older.

People with poor mental health tended to score lower too.

Staying active socially and physically brings benefits: exercising at least once a week, volunteering, joining a club or hobby group, and staying close to friends and family all lifted cognitive scores.

The HILDA data also point to a gender gap.

Just under half of people (48.2 per cent) answered all five financial literacy questions correctly, but that splits into 55.6 per cent of men and 41.4 per cent of women.

Men scoring higher on financial literacy isn't just an Australian pattern; it shows up internationally, and age and education don't explain it away.

Could the gap start at home? Do parents talk to boys and girls about money differently, or simply talk about it more with their sons?

What are we missing?

So, what can be done about the falling cognitive and financial literacy scores among young Australians?

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With four in ten 15 to 24-year-olds unable to grasp how spreading investments reduces risk, what does that mean for the financial decisions ahead of them?

This age group also records the lowest financial wellbeing scores, strengthening the case for teaching financial literacy in schools so young people leave with at least a grasp of the basics.

But school may be only half the answer.

We're missing something with this age group, and the classroom alone won't reach it.

The real shift could come from two things working together: straightforward financial literacy programs at school, and parents talking with their children about money, from budgeting and saving to weighing up an investment.

That conversation at home – financial socialisation – is where habits take root early.

Get both right and we could help to give this generation what the numbers say it's missing.