The most recent Household, Income and Labour Dynamics in Australia (HILDA) survey of over 17,000 Australians, undertaken by the Melbourne Institute, revealed a concerning drop in financial literacy levels across all age groups, with the largest declines in student financial literacy seen amongst 15–24-year-olds.
“Financial wellbeing is intrinsically linked to the overall physical, mental and social health of individuals and communities. However, improving outcomes across these domains is almost impossible to achieve if we don’t acknowledge and address the long-standing gaps in financial literacy and capability nationally,” Ms Caroline Stewart, CEO of the Ecstra Foundation.
“The HILDA report showed a massive drop in financial literacy amongst 15–24-year-olds, and in an environment of challenging economic times, that’s an alarming decline and one we should be concerned about.”
The report provides conclusive evidence that no progress has been made on improving the financial literacy of the Australian population since 2016, and in fact it reveals that the country has gone backwards.
“While there are a range of consumer advocates, educators, community organisations, academics, and financial institutions engaged in financial capability work, 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,” said Ms Stewart.
In a recent report, 98 per cent of parents and teachers agreed that financial education is important, but 68 per cent of parents didn’t know if their child was not learning about it in schools, or assumed they were not receiving any financial education.
Although the Australian school curriculum includes financial literacy – mostly through subjects such as maths, humanities, economics and business studies – Ms Stewart stresses that there isn’t a consistent approach to designing, teaching, supporting and measuring the effectiveness of financial education initiatives.
“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,” said Ms Stewart. “Hence the introduction and roll-out of the Talk Money program in 2022.”
The goal of Talk Money is to help Australian school students learn money lessons for life, to be confident talking about money and to make informed financial decisions. Over 110,000 students have participated in the program since launch in February 2022.
The in-classroom workshops teach foundational money lessons for life, are interactive to encourage students to ask questions, discuss what they are learning and take those lessons home to share. The program is offered free to all schools for years 5-10.
“Learning financial literacy early means young adults are in a better position to make good financial decisions, particularly later in life and can even stimulate interest in exciting careers in accounting and finance.
“School and community programs are a vital part of the solution, but not the whole solution,” said Stewart. “We believe that it will ably support other interactive financial literacy programs including the one offered by the Australian Government. The Treasurer’s Financial Literacy Challenge gives students exposure to topics they’ll need to be across to enter the workforce, buy a house, start a business or choose their super fund. Once completed, students receive a certificate as proof of their financially literate status, and importantly a digital certificate to attach to CVs when attempting to enter the workforce for the first time.
“As an employer, I know how favourably that certificate will be looked upon when recruiting new staff,” added Stewart.
“It is heartening to see the cooperation between Government and the private sector to drive the strategy and outcomes, as well as clearly communicate the benefits of a national approach to support consumers and build the future economic security and wellbeing of all Australians,” she concludes.
