It’s no secret that Australia is in the midst of a financial literacy crisis. Yet, despite the staggering statistics revealing our falling financial literacy levels, the responsibility to fix the problem doesn't seem to have obvious shoulders to rest on.
Parents? Universities? Employers? Local Government? Independent business? Our two cents? Schools.
In a perfect world, one would assume financial competency is a skill that would simply be naturally absorbed from parents, peers, employers and teachers. As one matures into adulthood, you would have a diverse and wholistic skillset to rely on. By and large within Australian society however, financial literacy is not privy to the natural distribution and information sharing culture that other essential life skills benefit from. Getting your drivers license or eating healthy foods are comfortable playground topics, but figuring out how to save for a car or budget for meals is largely left to self navigation.
When you combine this with the fact that only 25% of parents feel comfortable discussing money with their children, and the minimal coverage within Australian secondary school curriculum, the crisis deepens.
A frightening quarter of young Aussies are receiving no financial education at all.
These numbers are concerning and have worrisome implications for these students as they move into adulthood. Currently, just over 55% of Australian adults are financially literate, a fact that we can largely blame on the lack of financial education people are receiving prior to adulthood.
Ensuring a uniform financial education from parents or guardians is a difficult task. Duty of care exists, but implementation practicality is non-existent. Yet where duty of care does exist, and the practicality element is within reach - we turn to schools! With a little creativity and grit, it is entirely within our power to empower schools to place a greater emphasis on financial literacy.
75% of Australians believe that the education system “isn’t doing enough to equip students with the financial skills they need as an adult”.
Currently the schooling FinLit landscape reserves financially literacy topics for elective subjects such as business or commerce. The maths doesn't add up here - Every person in Australia interacts with the economy and financial systems... So why do only a small portion of young Aussies get an education on it? Schools have a growing obligation to expand their role to help their students become financially independent. Let’s talk about why!
In the OECD report about financial literacy in schools, the fact that schools provide the right context for learning about finance is highlighted. Schools not only have access to students during their most formative years, but more importantly provide an environment perfectly conducive to learning about money and financial wellbeing. They have access to resources students need to learn, and are able to provide higher quality lessons than many parents could at home. Additionally, schools have the capability to create a structured and reliable time and place for learning, with existing programs such as math, economics, history, or social sciences to facilitate topic incorporation.
The largest danger of leaving financial education to parents is the perpetuation of economic and social inequity. Predictably, those who tend to be in this 25% of parents comfortable to teach their kids about money, are from wealthier, upper class homes where the parents have existing strong levels of financial literacy. On the other hand, those who were not taught adequately tend to come from families where the parents are likely less financially confident.
Leaving financial literacy to parents simply enables the poverty cycle, allowing Australia’s socio-economic gap to grow wider.
By providing a foundational education to all Australian students through school, we can help close the money gap and ensure that all students have the tools to achieve a financially stable future for themselves. While some students will naturally receive a richer education than others, we can ensure all students are equipped with essential knowledge to navigate their financial journeys.
In an American survey, it was found that 69% of parents are reluctant when it comes to speaking to their children about money. This can be due to a variety of reasons, for example, insecurity about their own financial literacy levels or financial instability at home. You can't talk about or teach what you don't know!
As a result, young people are often raised with insecure money mindsets, perceiving money as a taboo topic. This leads to a closed door when it comes to questions or worries. Schools have the neutrality to overcome this by providing a safe space for students to ask their questions and receive thoughtful answers. Facilitated in an appropriate manner, schools can engage with the topic without the judgement or emotional strings typically attached to the taboo topic.
At Mandy, we believe schools have strong capability and leverage to address the heart of the financial literacy crisis. With a little creativity and grit, it is entirely within our power to empower schools to build a new generation of financial literate Aussies.
Check out Mandy's solution!