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.
Why do we need financial education?
Financial wellbeing is inextricably linked to our personal and social wellbeing. When money-management goes wrong, there can be severe short and long-term consequences for individuals, families and the community, including relationship problems, depression, anxiety, and even substance abuse.
Way Forward’s own Financial Hardship Advocates know all too well the challenges being faced by the 2.4 million Australian adults who are struggling to meet their personal day-to-day financial commitments; research shows time and time again that personal finances are the top cause of stress for Australians.
But it doesn’t have to be this way. By equipping – and mandating – schools to deliver courses/programs that cover the basics of personal finance and financial concepts, economics, and investing, we could endow every school leaver with basic financial skills, so they can feel well-informed and confident in their decision-making.
Australians want to learn more about money
Interestingly, while we know that Australians need financial education, research also shows that many people actually want it. According to a study by the University of Melbourne, 77% of the population have regrets with regards to their finances, with the top three of these regrets being related to behaviours – for example, not saving, investing or budgeting, while the fourth most common regret was ‘not learning more about finances and money’.
And it’s not just a retrospective wish; A 2021 survey by Australian Securities and Investments Commission (ASIC) – Australia’s financial markets conduct regulator – found that many young people want to know how to get the most from their money in the here and now. Over 50% of those surveyed expressed a clear interest in learning how to:
- invest money
- save money
- manage money well and not waste it
- file a tax return
- set financial goals and achieve them, e.g. buying a car or a property
- live out of home independently.
Learn to manage your money
All that said, school isn’t the only place where children and young people can learn the fundamentals of finance – it’s also important to lay the groundwork at home.
With access to digital devices, online services and financial products that make it ridiculously easy to spend, the Financial Basics Foundation has developed some great resources to help parents teach their kids good spending and saving habits. Build children’s financial resilience by downloading the Foundation’s handy spending checklist and following five simple rules for conscious spending.
For adults, our free, interactive budget planner is a great way to understand the reality of your current financial situation.
Equally, if debt across multiple creditors is already a feature of your life, it might be a good time to contact the team at Way Forward. We provide free assistance to people in financial hardship, by helping them to get out of debt faster. We’ll help you establish a workable budget and advocate for affordable arrangements with creditors. If we can’t help, we connect you with the experts and organisations that can.
Build a new financial future – starting today.
