Young Australians let down by lack of financial education

With money worries taking an enormous toll on the mental health and wellbeing of everyday Australians, there’s a pressing need for a nationally coordinated approach to financial education.

Amidst spiralling living costs and the increasing complexity of financial decision-making, developing young people’s money-management capabilities has never been more important.

What is financial literacy?

 The RBA (Reserve Bank of Australia) describes financial literacy as ‘a set of skills that allow people to manage their money wisely’. At a minimum, it includes basic numeracy – to be able to calculate rates of return on savings and borrowings, and an ‘appreciation of the trade-off between risk and return’.

And it isn’t just for big earners; improved financial capability is something we can all benefit from. When we’re more money-savvy, we’re better equipped to make informed decisions as a consumer, have the skills we need to manage our assets – including the likes of insurance, savings and superannuation – and are more likely to avoid things like identity theft and scams.

It’s a hot button issue for women in particular though, given they face some unique financial challenges. From the career costs of having a baby and/or caring responsibilities, to the fact that almost half of women are employed part time (compared to one in six men) – and the superannuation impacts of both these factors – it’s clear that many women have a financial mountain to climb. Hence, it’s critical that we improve female confidence and proactivity when it comes to money matters.

How can we help young people become money-savvy?

The non-profit Financial Basics Foundation, a provider of free financial literacy resources for educators, argues that injecting ‘principles of financial literacy into as many areas as possible across the curriculum’ is critical, particularly in the ‘wellbeing/pastoral care area of the school’s offerings’.

While schools play an integral role in preparing a young person for life in the real world, the Foundation fears this critical component is still being overlooked. And, importantly, even when money matters are tackled, it seems that it’s not typically happening in the right context. When delivered in Maths lessons, for example, it can lead to fixating on formulas and calculations, without actually getting to grips with the underlying concepts, and can further disengage students who aren’t mathematically inclined.

To better prepare young people for the real world, and a healthy financial future, the organisation says that a significant rethink is required, starting with governments recognising financial literacy as a core life skill. From there, the development of a nationally coordinated strategy, would give teachers the support to deliver relevant, engaging, standalone financial literacy education.