As young people gain greater access to the world of finance, their level of knowledge on how to manage money has dropped.

Many high school students are struggling with financial literacy, and the problem is worse in rural and regional areas, research has found.

Researcher Prof Ian Ramsay from the University of Melbourne’s Law School said the research showed concerning trends regarding managing finances, saving and understanding financial risk.

“Young people are active participants in the economy,” he says.

“They have credit cards, bank accounts, disposable incomes, use mobile phones and have other expenses. However when they lack financial literacy, this can lead to poor decision making.”

Researchers administered a test to surveyed over 200 year 11 students, gauging the level of awareness and control high-schoolers have when it comes to money - the average test score was 63 per cent.

Metropolitan students were significantly more informed than their rural or regional counterparts, the research found.

Students who have parents in a professional job also scored higher than their peers.

“The financial literacy scores of students increased when there were open conversations with parents about money and financial issues,” Dr Ramsay said.

“We also found that boys scored, on average, slightly higher than females.”

“In addition, when we asked students to assess their own financial literacy abilities, they typically overestimated their abilities. Also, students who had a positive attitude to saving and learning about financial matters had higher scores.”

Of all the areas tested, the highest scores across the board were for financial decision making and financial language comprehension. The lowest areas included consumer rights awareness and knowledge about specific financial matters.

The research will be published later this year in the Company & Securities Law Journal.