As part of this year’s Global Money Week, the Ecstra Foundation has called 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.
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.
“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.
“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 says.
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.
“Indeed, the effectiveness of individual financial literacy interventions is a question often raised by commentators and some consumer advocates, and I understand these concerns.
“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.
“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. 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,” Stewart says.
Ecstra launched its Talk Money program in February 2022 in response to the financial education gap in Australian schools. 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.
“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 says.
In Ecstra’s National financial education in schools survey, 98 per cent of parents and teachers agreed that financial education is important, but 68 per cent of parents didn’t know or thought their child was not learning about it in schools.
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.
Ecstra Foundation is a national charitable foundation committed to building the financial wellbeing of Australians, within a fair financial system. Ecstra works with other 80 partners across government, communities, academics and business.