New figures released by the Australian Bureau of Statistics on 26 June showed inflation continues its worrying upward trend, with consumer prices rising to 4% last month from a year earlier.
With some of the nation’s top forecasters now warning that Australia could be looking at up to two interest rate rises before the end of the year, a recession now looks almost certain. For schools, educating young people about financial literacy is perhaps just as important now as it was in the wake of the Global Financial Crisis in 2008.
The PISA 2022 Volume IV financial literacy assessment, which measured the financial skills of 15-year-olds in 14 OECD and 6 partner countries and economies, found while many students engage in basic financial activities from a young age, many still lack the skills and knowledge needed to make sound financial decisions.
“These results, combined with the increased incidence, complexity and potential impacts of financial frauds and scams, highlight the need to better equip our young people with the knowledge and skills necessary to make safe and informed financial decisions,” OECD Secretary-General Mathias Cormann said.
“We are keen to broaden the coverage of this assessment to help inform countries’ financial education policies and strategies with robust evidence, to ensure their education systems are as effective as they can be, including to prepare young people for their financial future.”
Socio-economically advantaged students outperformed their disadvantaged peers, with the socio-economic background accounting for 12% of the variation in performance. Not only did students from disadvantaged socio-economic backgrounds score lower in financial literacy, they also had fewer opportunities to learn about money.
The report shows schools can play an important role in turning this around, finding a positive correlation between financial literacy performance and students’ exposure to finance-related terms in schools. However, just two in three students have been exposed to school tasks exploring the difference between spending money on needs and wants.
The authors of the study say opportunities to learn basic financial skills in school should be offered to all students, especially those who need them most, from the earliest possible age.
Teach financial literacy as a stand-alone subject
According to Katrina Samios, CEO and Director of Financial Basics Foundation, the way financial literacy content is delivered directly affects the confidence in female students to learn. She says this important subject should be taught as a standalone subject in schools, arguing that topics such as budgeting, saving and investing are fundamentals for young people’s future success.
“Currently financial literacy is delivered in an ad-hoc manner in schools – with elements mostly being delivered in Mathematics and Economics and Business classes,” Samios told The Educator.
“The focus in mathematics is often based around working out formulas and calculations. Many students, especially girls ‘switch off’ with this learning approach.”
To address this, Samios says a systematic approach to Financial Literacy is needed in Australian schools, specifically, a stand-alone life skills course which focuses on real life personal finance.
“Schools should adopt an inclusive approach to financial literacy programs, ensuring content is relatable and accessible for female students,” she said.
“Emphasise practical, real-life applications of financial concepts, and create a supportive environment that encourages questions and collaboration to foster mutual learning and confidence.”
Make financial literacy fun for students
Making the subject of financial literacy more exciting and engaging for kids could also be effective, with a recent survey by ING showing 71% of Australians believe gaming can be an educational tool when it comes to learning about finances.
The survey from ING found close to two in five (38%) Aussie gamers say the strategies used in digital games have positively influenced their current saving habits, and nearly three in five (58%) of them say they would be more inclined to play a digital game if they knew it would improve their financial literacy.
Matt Bowen, Head of Consumer and Market Insights at ING Australia, said digital gaming may also play a larger role in financial wellbeing for the next generation of Aussies, like Gen Alpha, as parents seek more fun and engaging ways to teach their children (and themselves) about finance.
“So, whether Aussies practice saving up their ‘Simoleans’ in The Sims to buy a home, or invest in the Turnip ‘Stalk Market’ in Animal Crossing to help pay off their debt, playing these games, coupled with helpful, straight forward insights from a trusted financial institution, can empower Aussies with fun and practical ways to tackle financial success.”
Gamification making a difference
A 2020 survey of more than 1,600 children in the UK found the top three things that children believe would make learning about money more fun are “jokes and funny stuff”, “games”, and using “real” money in “real” situations.
Banqer, a simulated online banking program for schools, answers this call by providing “a hands-on environment for kids to get curious, creative, and ultimately, confident with money”, and with gamification as a core element.
Since its inception in 2014, the company has evolved into a sophisticated simulated virtual economy for primary and secondary schools, helping more than 300,000 students take charge of their financial future.
In a recent interview with The Educator, Banqer’s Co-CEO, Simon Brown explained how the program supports teachers in their understanding and delivery of financial literacy lessons.
“To set teachers up for success, our team provides onboarding and PD before schools make a start and offer personalised support throughout the year,” Brown told The Educator.
“While the Banqer High platform is super intuitive, the difference between average or brilliant use is how Banqer is applied in the classroom context.”
To support teachers in this way, the company crowdsources examples of innovative use across Australasia and inspires its community in regular newsletters.
“And, of course, our team is on call every school day to answer any questions or troubleshoot any concerns.”
Importantly, the program avoids fostering a purely transactional mindset in students and encourages more intrinsic motivations for learning.
“While there is a baked-in classroom incentivisation system in Banqer High, we’ve found students are more interested in growing their achievements in the platform [savings, property, careers or net worth],” Brown explained.
“Student feedback suggests they are incredibly intrinsically motivated to understand and engage in the real world, particularly around financial matters.”
Brown noted that young people are currently living through a cost-of-living crisis, so they and their families are looking for tools to navigate this.
“Banqer High empowers them to make decisions for themselves around taking on debt, making investments or managing risk. And feeling empowered is one of the most effective motivations for continued learning.”
Meaningful change through early intervention
One financial literacy education initiative that is seeing some outstanding results is the Talk Money program, launched in February 2022 by Ecstra Foundation. Since its launch, the program has reached 262,171 students across 7,000 workshops in 1,125 schools, significantly improving the financial literacy of young people across Australia.
Through survey feedback after the workshops, 90% of teachers said their students’ money knowledge had improved and 82% of teachers observed an increase in students’ confidence to manage money. Motivation to achieve financial goals increased and teachers credit the program for covering topics that would not otherwise have been taught in the classroom.
Dr Tracey West, Ecstra’s financial education manager said the financial literacy of young adults is particularly critical as financial habits formed in early adulthood are likely to persist, and financial behaviour has been shown to have a major impact on financial wellbeing.
“Studies have established a correlation between low financial literacy and poor financial outcomes later in life, and data shows that money attitudes and unsound financial management practices are predictors of debt and financial problems amongst young Australians,” West told The Educator.
“The Talk Money program recognises that developing good financial skills in young people is critical for their financial wellbeing in adulthood. This program successfully builds the confidence of young people to have age-appropriate money conversations.”
reinforce that the ability to say ‘no’ is a key skill that supports long-term financial outcomes,” West said.
“Previous generations have avoided talking about money and labelled it a taboo subject. We are helping to break down these beliefs so that the next generation can ask for help when they need it, particularly when making decisions that are new to them.”
West said 80% of students report feeling more confident about discussing money following the workshops.
“Importantly, students tell us they have learnt that it is acceptable to decline spending when faced with pressure from others,” she said.
“As our young people face ever-increasing influences on spending and easy access to credit, having the confidence to ask questions and to take the time to think about decisions will set them up with good money management skills for life.”