Australia is now out of step with global leaders when it comes to financial literacy at a school level, new research shows.
Financial education has been announced as an official part of the curriculum in both the UK and USA, but a subject dedicated to personal financial studies it’s still a way off for Australian schools, according to RateCity.
Yet, the findings from a review of Australia’s National Financial Literacy Strategy are set to be announced early next year by ASIC’s Financial Literacy Board, and will outline the key priorities for all Australians – not just children – over the next three years.
Alex Parsons, CEO of RateCity.com.au, is calling on government to focus on greater financial education at a school level.
“Financial education that’s interesting and relevant goes a long way to help children make better choices about money as adults and it needs to be a more significant part of the school curriculum,” he said.
“This is an exciting opportunity for Australia to be a champion in educating kids about complex financial issues and even lead the way globally.
“At the moment financial institutions are leading the charge on this by catering to school banking. But what we really hope to see is more practical finance education for kids.”
RateCity shows that a number of institutions cater to money education of young children under 12 years, as well as older teens, through school banking initiatives. Some of the institutions involved include – Commonwealth Bank (Dollarmites Club), and Hume Building Society (Junior Saver Club), among others.
He added that the world of personal finances is becoming more complicated and Australian children can no longer afford to be ignorant to complex financial products.
“It’s not just about learning how to deposit money into a savings account, or planning a budget; children would also benefit from learning that failing to pay a phone bill on time or skipping a credit card repayment could mean struggling to get a home loan one day,” he said.
“The ways we use money has changed a huge amount over the last decade and it is much easier to spend beyond your capabilities now. You can spend money you don’t have (credit cards), withdraw cash from almost anywhere (ATMs) and pay friends via a text message. Children need to be taught the fundamentals to ensure this increased accessibility doesn’t come with negative future consequences.”
Parsons added that while there are some great resources available to children, parents and teachers to improve financial literacy, including ASIC’s MoneySmart Teaching Program, an opportunity to really support greater financial literacy in schools is still a way off.
As a result, Australia is now behind the UK and USA, said Parsons.
“Financial education has just been confirmed as an official part of the English national curriculum, and personal finance is already being taught in schools in Wales, Scotland and Northern Ireland.
“A number of states in the US have adopted personal finance standards as part of overall curriculum requirements, including covering topics such as saving and investing, fraud and identify theft, and weighing careers against earnings.
“A good way to start teaching kids the value of money is to give them regular pocket money and help them open a junior bank account and show them how to build up savings to buy something special.”
RateCity shows that interest rates on children’s savings accounts are higher than typical savings accounts and range up to 5.75 percent, and many have no fees. Typically though, a number of conditions must be met to be eligible for the higher rate.
However, the responsibility of educating kids about money should not lie entirely with parents, particularly given that many may not have had any financial education themselves and technology has advanced at such a rapid rate, he said.
“At the moment most of the pressure to educate about personal finance is coming from industry, but it really should be a three-way conversation between schools, parents and institutions and it needs to happen now.”