As part of this year’s Global Money Week, there are calls for an overhaul of the existing education and support systems to help close the persistent gaps in financial education and literacy affecting many Australians.
The most recent Household, Income and Labour Dynamics in Australia (HILDA) survey of over 17,000 Australians, undertaken by the Melbourne Institute, shows a concerning drop in financial literacy levels across all age groups, with the largest declines amongst 15-24 year olds.
A separate survey by the Ecstra Foundation found 98% of parents and teachers agreed that financial education is important, but 68% of parents didn’t know or thought their child was not learning about it in schools.
Caroline Stewart, CEO of the Ecstra Foundation, says Global Money Week is an ideal time to raise awareness of the need for more support for financial education in Australian schools and communities.
“Global Money Week focuses on the importance of ensuring that young people are financially aware, are gradually acquiring the knowledge, skills, attitude and behaviours necessary to make sound financial decisions and ultimately can achieve financial wellbeing,” Stewart said.
“Financial wellbeing is intrinsically linked to the overall physical, mental and social health of individuals and communities.”
However, Stewart said improving outcomes across these domains is “almost impossible” to achieve unless the long-standing gaps in financial literacy and capability nationally are acknowledged and addressed.
“The latest HILDA report makes it clear that financial literacy is declining in Australia and this is a significant concern particularly at time when cost of living pressures are starting to hit home,” Stewart said.
According to the HILDA report, “The unavoidable conclusion is that no progress has been made on improving the financial literacy of the Australian population since 2016 and in fact we have gone backwards”.
Whilst there are a range of consumer advocates, educators, community organisations, academics, and financial institutions engaged in financial capability work, Stewart says the HILDA data, as well as other similar studies, are a stark reminder that without a holistic approach to financial education, there will continue to be a decline in financial literacy in Australia.
“For example, although the Australian school curriculum includes financial literacy – mostly through subjects such as maths, humanities, economics and business studies – there isn’t a consistent approach to designing, teaching, supporting and measuring the effectiveness of financial education initiatives,” Stewart said.
“Indeed, the effectiveness of individual financial literacy interventions is a question often raised by commentators and some consumer advocates, and I understand these concerns.”
Stewart says that in a complex world with increasing cost of living pressures and financial stress for many households, “no amount of personal finance education can ever act as a substitute for consumer protection mechanisms, backed by strong regulatory oversight”.
“However, learning about money is a lifelong journey. School and community programs are a vital part of the solution, but not the whole solution,” she said.
“This is why we believe the Australian Government needs to step up and recommit to the National Financial Capability Strategy, which Treasury took over from ASIC in 2021.”
Stewart said a lead agency could drive the strategy and outcomes including coordinating the efforts of the many organisations working to support consumers, and clearly communicate the benefits of a national approach working to build the future economic security and wellbeing of all Australians.
Ecstra launched its Talk Money program in February 2022 in response to the financial education gap in Australian schools. To date, more than 110,000 students have participated in the program, which is offered free to all schools for years 5-10.
The interactive, in-class workshops, teach foundational money lessons for life, encourage students to ask questions, discuss what they are learning and take those lessons home to share.
“Financial education plays a key role in building financial capability. Schools provide an important learning environment to teach practical money skills, but they also need to be supported with up-to-date resources, tools and incursion opportunities to teach it effectively,” Stewart said.
The original version of this article appeared as a press release from Ecstra Foundation.