As inflation, rising interest rates and rising unemployment puts the squeeze on many Australian families, children are missing out on crucial school supplies, giving them a very real sense of just how important it is to manage money during an economic downturn.
However, the latest Household, Income and Labour Dynamics survey, has revealed a significant drop in the financial literacy of 15 to 24-year-olds.
A separate study by accounting firm Findex shows one in two young Australians feel financially out of control – indicating that young Australians are potentially not equipped to manage the current economic downturn, and cost-of-living crisis.
To address this, some schools are integrating financial education into their curriculum and making sure kids develop money smarts from a young age.
At Strathcona Girls Grammar, students are learning about budgeting, superannuation, saving, and even entrepreneurial skills so they may one day start their own business.
Below, Kara Baxter, Dean of Teaching and Learning at Strathcona Girls Grammar, tells The Educator about how schools can navigate some of the pitfalls associated with teaching financial literacy, and shares some tips on how to engage young people in this important subject.
TE: What are some easy ways parents and teachers can teach young people about finances?
There are a range of interactive approaches that can be used to teach young people about finances.
Budget challenges modelled on real-life scenarios, can illustrate how financial concepts effect our lives. Setting out challenges like budgeting for a family trip, planning a class party, or making a desired purchase can help children understand the basics of how money can be allocated or spent with intention.
For older children, opening a bank account is a great way to encourage financial responsibility. Having access to financial experts or local bank representatives who can offer insights on money management, saving, and investing can empower them to consider how they might organise their own finances.
Encourage open conversations on financial topics like when and how much to spend versus save, the impact of consumer choices, or the pros and cons of credit. Use current events and news articles related to finance to highlight how financial planning and money challenges can impact individuals and society. This will help students understand real-world implications.
TE: How can parents and teachers have honest conversations with young people about money?
For parents, start by being honest about your family's financial situation without oversharing complex or unnecessary details. Explain that you have a budget and that you make choices based on it. If your child asks about money or how things are paid for, provide straightforward answers. Avoid brushing off their questions, as this could hinder their understanding.
Discuss the concept of needs verses wants to explain the difference between things we need (like food, shelter, and clothing) and things we want (like toys or entertainment). This helps children understand priorities when it comes to spending money.
Talk about the importance charitable giving and helping others by involving them in deciding where to donate a portion of their allowance or money gifts.
Emphasize that money is a tool to help us achieve our goals and values. Discuss how spending aligns with what's important to your family.
TE: Can you share any ideas for teaching saving habits to young people?
Savings Jars: Provide separate jars for spending, saving, and giving. When they receive money, encourage them to allocate a portion to each jar, fostering a habit of dividing income.
Goal Setting: Help your child set achievable savings goals, whether it's for a toy, a gadget, or a fun activity. Keep them motivated by creating a chart or visual tracker that shows their progress towards their savings goal. This cultivates patience and shows the rewards of saving.
Rewards for Saving: Offer small rewards or incentives for reaching specific savings milestones, reinforcing the positive impact of saving. You may offer to match a percentage of their savings to show the benefits of saving over time.
Delayed Gratification: Teach students to wait before making a purchase. Delaying gratification helps your child appreciate the value of their purchases and to think before spending.
TE: What is Strathcona’s approach to teaching financial literacy in the classroom?
At Strathcona, financial education is woven throughout the curriculum.
For example, in Year 6 students undertake key financial learning experiences through planning their own business. This allows students to develop clear understanding of production costs, expenses, marketing, and profit.
Also, a core part of Strathcona’s Year 9 curriculum is our TC Envision program, which sees students learn entrepreneurial and life-ready skills to prepare them for potential careers in business. Students develop business models and launch a product on an online marketplace tackling everything from marketing to merchandising, identifying customers, forecasting and building financial literacy. This introduces our students to concepts such as revenue, expenses, and profit.
As part of Strathcona’s Year 10 Commerce course students are also educated around topics such as budgeting, understanding superannuation, and how to best save and invest for the future. Guest speakers for our senior students are often arranged such as financial advisers to visit the school to offer professional advice and insight into managing income, expenses, and influences on saving.