tag:theconversation.com,2011:/nz/topics/students-financial-literacy-30175/articlesStudents financial literacy – The Conversation2023-03-26T19:12:37Ztag:theconversation.com,2011:article/2023312023-03-26T19:12:37Z2023-03-26T19:12:37ZAre you financially literate? Here are 7 signs you’re on the right track<figure><img src="https://images.theconversation.com/files/516886/original/file-20230322-26-t0tjld.jpg?ixlib=rb-1.1.0&rect=0%2C32%2C5378%2C3604&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><a class="source" href="https://www.pexels.com/photo/woman-in-brown-coat-holding-a-bank-card-3784391/">Photo by Andrea Piacquadio/Pexels</a>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span></figcaption></figure><p>With the cost of living and interest rates rising, a growing number of Australians are struggling to manage their <a href="https://www.smh.com.au/money/planning-and-budgeting/almost-half-of-australia-is-financially-stressed-here-s-one-way-to-fix-it-20221011-p5bowq.html">finances</a>. Many are experiencing real <a href="https://www.anu.edu.au/news/all-news/australians-under-increasing-financial-stress#:%7E:text=The%2520level%2520of%2520financial%2520stress,say%2520they%2520are%2520struggling%2520financially">financial stress</a>.</p>
<p>But even in the best of times, managing your finances is hard. Every day, you’re making complex financial decisions (some of which carry huge ramifications) and there are more financial products and services available than ever before. Navigating this minefield can be overwhelming and lead to financial anxiety. </p>
<p>Being financially literate helps. But what does “financial literacy” mean in practice?</p>
<p>Here are seven signs you’ve got the basics covered.</p>
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Read more:
<a href="https://theconversation.com/kids-and-money-five-ways-to-start-the-conversation-193632">Kids and money: five ways to start the conversation</a>
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<h2>1. You track your cashflow</h2>
<p>By tracking your cashflow on a regular basis, you’re ensuring your expenses don’t exceed your income. In other words, you make sure you’re earning more than you spend.</p>
<p>A good sign you’ve successfully managed your cashflow is that you have a surplus or a buffer.</p>
<p>These left-over funds can be used to boost savings, pay off debt or meet other financial commitments. </p>
<p>Cashflow management allows you to assess whether there are opportunities to increase your savings and/or reduce spending. Being able to manage your earnings and spending is a key financial skill.</p>
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<a href="https://images.theconversation.com/files/517074/original/file-20230322-18-7vh5sn.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/517074/original/file-20230322-18-7vh5sn.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/517074/original/file-20230322-18-7vh5sn.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/517074/original/file-20230322-18-7vh5sn.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/517074/original/file-20230322-18-7vh5sn.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/517074/original/file-20230322-18-7vh5sn.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/517074/original/file-20230322-18-7vh5sn.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/517074/original/file-20230322-18-7vh5sn.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<span class="caption">Do you know where your money goes?</span>
<span class="attribution"><a class="source" href="https://www.pexels.com/photo/woman-in-blue-denim-jeans-holding-silver-iphone-6-5076514/">Photo by cottonbro studio/Pexels</a>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span>
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<h2>2. You have a budget – and you follow it</h2>
<p>Setting and following a budget requires financial discipline, which is a key part of financial literacy. </p>
<p>By following a budget, you’re putting a measure in place to live within your means and reduce the risk of overspending. </p>
<p>With all the competing demands that come with managing money, your budget can be a tool to keep you on track. And developing this habit over time can empower you to make wise financial decisions.</p>
<h2>3. You understand the difference between good debt and bad debt</h2>
<p>Love it or hate it, debt forms part of our financial portfolios and sustains the financial institutions we interact with. Knowing how to make debt work for you is a skill and a sign of good financial knowledge. It is crucial to understand the difference between good debt and bad debt.</p>
<p>Good debt is debt used to improve your long-term financial position or net worth, such as a home loan.</p>
<p>Bad debt tends to be consumption-driven and doesn’t have lasting value. Examples include payday loans or retail accounts.</p>
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<a href="https://images.theconversation.com/files/517076/original/file-20230322-22-r5besf.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="A woman does calculations" src="https://images.theconversation.com/files/517076/original/file-20230322-22-r5besf.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/517076/original/file-20230322-22-r5besf.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/517076/original/file-20230322-22-r5besf.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/517076/original/file-20230322-22-r5besf.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/517076/original/file-20230322-22-r5besf.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/517076/original/file-20230322-22-r5besf.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/517076/original/file-20230322-22-r5besf.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<span class="caption">Do you have a budget to keep you on track?</span>
<span class="attribution"><a class="source" href="https://www.pexels.com/photo/woman-uses-calculator-7491011/">Photo by RODNAE Productions/Pexels</a>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span>
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<h2>4. You have your money in various places</h2>
<p>One of the key concepts of financially literacy is understanding the importance of diversification.</p>
<p>By having your money spread across various places (such as a savings account, property, the share market, superannuation and so on), you’ve reduced the concentration of risk.</p>
<p>This helps protect your wealth in tough economic times.</p>
<h2>5. You understand how financial assets work, along with their pros and cons</h2>
<p>Financial assets refers to things like cash, shares and bonds. It’s important to understand how financial assets work and how they can either help or hurt your financial position.</p>
<p>For instance, savings accounts are a safe financial instrument that earn interest on the amount accumulated within the account. But the fact they’re so safe also means that they won’t outperform inflation. </p>
<p>This type of knowledge is an imperative part of financial literacy.</p>
<h2>6. You’re aware of your financial strengths and weaknesses</h2>
<p>Financially literate people reflect on their capabilities. </p>
<p>When you can appreciate where your financial strengths and weaknesses lie, you can make better financial decisions and prioritise your needs.</p>
<p>On the other hand, being oblivious to your strengths and weaknesses means you miss opportunities to improve your financial health.</p>
<p>For example, perhaps you buy unnecessary stuff when you feel sad. Or maybe you panic when faced with tough financial choices and make quick decisions just to make the problem go away.</p>
<p>Neglecting to reflect on patterns of behaviour can lead to serious and possibly irreversible financial mistakes.</p>
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<a href="https://images.theconversation.com/files/517075/original/file-20230322-20-f6yeod.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/517075/original/file-20230322-20-f6yeod.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/517075/original/file-20230322-20-f6yeod.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=421&fit=crop&dpr=1 600w, https://images.theconversation.com/files/517075/original/file-20230322-20-f6yeod.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=421&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/517075/original/file-20230322-20-f6yeod.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=421&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/517075/original/file-20230322-20-f6yeod.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=529&fit=crop&dpr=1 754w, https://images.theconversation.com/files/517075/original/file-20230322-20-f6yeod.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=529&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/517075/original/file-20230322-20-f6yeod.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=529&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<span class="caption">Understanding debt is important.</span>
<span class="attribution"><a class="source" href="https://www.pexels.com/photo/stressed-woman-looking-at-documents-6963054/">Photo by Mikhail Nilov/Pexels</a>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span>
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<h2>7. You set financial goals and put measures in place to meet them</h2>
<p>Financially literate people plan for their finances. This involves setting goals for either earnings, savings, investments, and debt management or putting measures in place to protect wealth (via, for example, insurance to protect your wealth against loss). </p>
<p>Setting goals is one thing, but it’s also important to have a system and habits in place to achieve them. </p>
<p>Make sure you understand what you’re trying to achieve with your goals, why the goals are important and how you’ll achieve them.</p>
<p>Boosting your financial literacy can feel tough at first. But tackling your finances head on, controlling spending, participating in financial markets, handling debt, being able to understand financial assets and working towards financial goals can help you feel in control of your financial situation. </p>
<p>Everyone’s financial situation is unique, so none of what I’ve said here should be taken as financial advice. You can find <a href="https://moneysmart.gov.au/managing-debt/financial-counselling">free financial counsellors</a> via the government’s MoneySmart site and if you need help with debt, contact the <a href="https://ndh.org.au/about-national-debt-helpline/contact-us/">National Debt Helpline</a> on 1800 007 007.</p>
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Read more:
<a href="https://theconversation.com/borrowing-money-isnt-always-a-bad-thing-debt-can-be-a-sensible-way-to-build-wealth-192630">Borrowing money isn't always a bad thing – debt can be a sensible way to build wealth</a>
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<img src="https://counter.theconversation.com/content/202331/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Bomikazi Zeka does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Even in the best of times, managing your finances is hard. We’re told to make sure we are financially literate but what does that mean in practice? Here are seven signs you’ve got the basics.Bomikazi Zeka, Assistant Professor in Finance and Financial Planning, University of CanberraLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1779182022-03-02T19:06:33Z2022-03-02T19:06:33ZMany students don’t know how to manage their money. Here are 6 ways to improve financial literacy education<figure><img src="https://images.theconversation.com/files/449074/original/file-20220301-21-xrvkgd.jpg?ixlib=rb-1.1.0&rect=7%2C7%2C5168%2C3437&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Shutterstock</span></span></figcaption></figure><p>How we can improve the teaching of financial literacy in high school? And why is it important?</p>
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<a href="https://images.theconversation.com/files/449061/original/file-20220301-19-18d6aj7.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="Cover of report on Financial Literacy of Young Australians" src="https://images.theconversation.com/files/449061/original/file-20220301-19-18d6aj7.png?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/449061/original/file-20220301-19-18d6aj7.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=850&fit=crop&dpr=1 600w, https://images.theconversation.com/files/449061/original/file-20220301-19-18d6aj7.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=850&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/449061/original/file-20220301-19-18d6aj7.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=850&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/449061/original/file-20220301-19-18d6aj7.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=1068&fit=crop&dpr=1 754w, https://images.theconversation.com/files/449061/original/file-20220301-19-18d6aj7.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=1068&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/449061/original/file-20220301-19-18d6aj7.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=1068&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<span class="attribution"><a class="source" href="https://www.financialbasics.org.au/research-reports.aspx">Financial Basics Foundation</a></span>
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<p>People need a basic understanding of financial concepts to make good financial decisions. <a href="https://www.financialbasics.org.au/uploads/media/documents/FBF%20Financial%20Literacy%20of%20Young%20Australians%20March%202022.pdf">Our newly released research</a> found most students generally do not know a lot about personal finance. This includes being able to apply basic numeracy to real-life financial situations, such as making purchasing decisions that are value-for-money and understanding interest on loans and investments.</p>
<p>Our report also makes six recommendations to improve financial literacy education in schools.</p>
<p>Our findings were consistent with <a href="https://www.oecd.org/pisa/publications/PISA2018_VolIV_AUScountrynote.pdf">previous evidence</a> that 16% of Australian 15-year-olds lack even the basic level of financial literacy they need to participate in society. There is <a href="https://research.acer.edu.au/cgi/viewcontent.cgi?article=1049&context=ozpisa">evidence</a> that financial literacy in this age group is declining. </p>
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Read more:
<a href="https://theconversation.com/aussie-kids-financial-knowledge-is-on-the-decline-the-proposed-national-curriculum-has-downgraded-it-even-further-163110">Aussie kids' financial knowledge is on the decline. The proposed national curriculum has downgraded it even further</a>
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<p>This trend is concerning. The senior years of high school are a time when students take on more personal responsibility and financial independence. The <a href="https://link.springer.com/article/10.1007/s10964-009-9432-x">financial habits they form</a> then may last through adulthood. Low financial literacy is persistently <a href="https://sjes.springeropen.com/articles/10.1186/s41937-019-0027-5">linked to poorer financial outcomes</a>.</p>
<p>The <a href="https://www.australiancurriculum.edu.au/resources/curriculum-connections/portfolios/consumer-and-financial-literacy/">Australian Curriculum</a> acknowledges students need financial literacy to operate in our financial world. However, this curriculum only covers up to year 10. In years 11 and 12, the years that are particularly important in shaping students’ financial capability, financial literacy is taught only in lower-level maths subjects. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/449076/original/file-20220301-17-1uhl89f.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="Infographic comparing Australia and other countries on variation in financial literacy and use of mobile apps and phones for financial transactions." src="https://images.theconversation.com/files/449076/original/file-20220301-17-1uhl89f.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/449076/original/file-20220301-17-1uhl89f.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=149&fit=crop&dpr=1 600w, https://images.theconversation.com/files/449076/original/file-20220301-17-1uhl89f.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=149&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/449076/original/file-20220301-17-1uhl89f.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=149&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/449076/original/file-20220301-17-1uhl89f.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=187&fit=crop&dpr=1 754w, https://images.theconversation.com/files/449076/original/file-20220301-17-1uhl89f.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=187&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/449076/original/file-20220301-17-1uhl89f.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=187&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<span class="caption">How Australia compares to other countries in the PISA 2018 assessment of students’ financial literacy.</span>
<span class="attribution"><a class="source" href="https://www.acer.org/files/PISA-2018-Financial-Literacy-infographic.pdf">ACER/PISA 2018</a>, <a class="license" href="http://creativecommons.org/licenses/by-nc-nd/4.0/">CC BY-NC-ND</a></span>
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<h2>What did the study find?</h2>
<p><a href="https://www.financialbasics.org.au/uploads/media/documents/FBF%20Financial%20Literacy%20of%20Young%20Australians%20March%202022.pdf">Our research</a> explored the financial literacy of students in years 10, 11 and 12 at two urban and two rural schools. We found what students do know about financial literacy has been learned from home, maths or business studies. Students who were undertaking business studies were far more informed than other students.</p>
<p>Home life <a href="https://static1.squarespace.com/static/597b61a959cc68be42d2ee8c/t/599cc1cfe4fcb561252d6449/1503445457034/Wave-2-Report.pdf">has been found</a> to have a huge impact on a child’s financial literacy. There are often <a href="https://www.smh.com.au/money/planning-and-budgeting/financial-literacy-should-be-a-bigger-part-of-the-school-curriculum-20190705-p524gm.html">calls for parents to teach their children about personal finance</a>. However, that assumes parents are able and willing to do that. </p>
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Read more:
<a href="https://theconversation.com/how-to-teach-your-kids-to-think-more-critically-about-money-84699">How to teach your kids to think more critically about money</a>
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<p>The students we spoke to were incredibly diverse. Household structures varied greatly, with many students not living with their parent/s. There was also evidence of parents not being able to provide financial guidance.</p>
<p>Nearly half the surveyed students preferred not to think about their financial situation. </p>
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<a href="https://images.theconversation.com/files/449059/original/file-20220228-25-pj8z6v.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="Chart showing proportions agreeing or disagreeing with proposition 'I don't like to think about my financial situation'." src="https://images.theconversation.com/files/449059/original/file-20220228-25-pj8z6v.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/449059/original/file-20220228-25-pj8z6v.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=330&fit=crop&dpr=1 600w, https://images.theconversation.com/files/449059/original/file-20220228-25-pj8z6v.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=330&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/449059/original/file-20220228-25-pj8z6v.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=330&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/449059/original/file-20220228-25-pj8z6v.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=415&fit=crop&dpr=1 754w, https://images.theconversation.com/files/449059/original/file-20220228-25-pj8z6v.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=415&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/449059/original/file-20220228-25-pj8z6v.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=415&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<span class="attribution"><a class="source" href="https://www.financialbasics.org.au/uploads/media/documents/FBF%20Financial%20Literacy%20of%20Young%20Australians%20March%202022.pdf">De Zwaan & West 2022, Financial Literacy of Young Australians</a></span>
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<p>We talked to a lot of the students about maths and found this was not the most effective curriculum area for learning about personal finance. When taught as part of the maths curriculum it tends to result in students fixating on formulas and calculations, without understanding the underlying concepts. As one student said:</p>
<blockquote>
<p>“I only really remember the formula because that’s all we got taught.”</p>
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<p>Many students also dislike maths. This means they are disengaged from learning at the outset. One student told us:</p>
<blockquote>
<p>“If I was in class doing that [a simple question about interest], I would just read it, keep reading it, but not actually process it or try it because I’d just give up.” </p>
</blockquote>
<p>There was also often a disconnect between the financial scenarios students were learning about and their experiences in their own lives. </p>
<p>Students who could remember financial concepts would often recall an experience or something from history when talking about it. This suggests stories may be more effective in communicating financial concepts. For example, one student said of inflation: </p>
<blockquote>
<p>“Over time, because obviously more money is being printed […] people think printing money creates more money and you’re richer, when in reality you’re just making the currency you have worthless, because there’s so much of it, that it’s not difficult to acquire it at all. I learned most of that from history.”</p>
</blockquote>
<p>Interestingly, we found evidence of young women in particular needing more context to make financial decisions. When asked financial questions, they wondered about different aspects of the question rather than quickly answering. Test questions commonly used to assess financial knowledge often offer little context. </p>
<p>About one in three students agreed they found managing their personal finances difficult and confusing. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/449060/original/file-20220228-19-1cw96h8.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="Chart showing proportions agreeing or disagreeing with proposition 'I find managing my finances difficult and confusing'." src="https://images.theconversation.com/files/449060/original/file-20220228-19-1cw96h8.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/449060/original/file-20220228-19-1cw96h8.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=334&fit=crop&dpr=1 600w, https://images.theconversation.com/files/449060/original/file-20220228-19-1cw96h8.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=334&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/449060/original/file-20220228-19-1cw96h8.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=334&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/449060/original/file-20220228-19-1cw96h8.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=419&fit=crop&dpr=1 754w, https://images.theconversation.com/files/449060/original/file-20220228-19-1cw96h8.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=419&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/449060/original/file-20220228-19-1cw96h8.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=419&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption"></span>
<span class="attribution"><a class="source" href="https://www.financialbasics.org.au/uploads/media/documents/FBF%20Financial%20Literacy%20of%20Young%20Australians%20March%202022.pdf">De Zwaan & West 2022, Financial Literacy of Young Australians</a></span>
</figcaption>
</figure>
<p>Finally, we noted many students were not learning financial strategies, such as moderating spending, that have lifelong benefits.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/would-you-pass-this-financial-literacy-quiz-many-wont-and-its-affecting-expensive-aged-care-decisions-175063">Would you pass this financial literacy quiz? Many won't – and it's affecting expensive aged care decisions</a>
</strong>
</em>
</p>
<hr>
<h2>How can we improve?</h2>
<p>Given the importance of financial literacy for student well-being, our report makes these recommendations:</p>
<ol>
<li><p>financial literacy education should be elevated in high schools, ideally as a standalone program, but also by injecting principles of financial literacy into as many curriculum areas as possible – particularly in the well-being and pastoral care area</p></li>
<li><p>financial literacy education in maths needs to be improved, using a range of approaches – not limited to calculation activities</p></li>
<li><p>financial literacy education should be expanded to subjects other than maths and business, in line with shifting the focus from financial calculations to financial concepts</p></li>
<li><p>learning activities should be aligned with the students’ general level of financial experience</p></li>
<li><p>students need more exposure to effective financial strategies, in particular how to moderate (or control) spending for saving</p></li>
<li><p>a range of assessment methods should be offered to enable students to show what they have learnt. Assessment tasks should go beyond calculations and could include written pieces, visual or dramatic presentations, or oral explanations. These could be presented by groups or individuals.</p></li>
</ol><img src="https://counter.theconversation.com/content/177918/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Laura de Zwaan has received funding from Ecstra Foundation and the Financial Basics Foundation. She is an affiliate member of the Financial Planning Association and is a member of the Financial Planning Academic Forum. She has also been a member of the Wealth Academy Advisory Board. </span></em></p><p class="fine-print"><em><span>Tracey West has undertaken consultancy work for ECSTRA Foundation and Treasury on financial literacy. She has also received grant funding from ECSTRA Foundation and the Financial Basics Foundation.</span></em></p>A study of how schools deliver financial literacy education has identified better ways to help students master the basics they all need to know for real-life financial situations.Laura de Zwaan, Lecturer, Department of Accounting, Finance and Economics, Griffith UniversityTracey West, Lecturer in Behavioural Finance, Griffith UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1631102021-07-06T20:09:27Z2021-07-06T20:09:27ZAussie kids’ financial knowledge is on the decline. The proposed national curriculum has downgraded it even further<figure><img src="https://images.theconversation.com/files/409659/original/file-20210705-19-18k5p6l.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/little-boy-putting-pocket-money-piggy-1100944310">Shutterstock</a></span></figcaption></figure><p>Financial literacy means <a href="https://www.oecd-ilibrary.org/sites/a1fad77c-en/index.html?itemId=/content/component/a1fad77c-en">having an understanding of financial concepts</a> and risks, and the skills, motivation and confidence to make effective decisions across a range of financial contexts. </p>
<p>In Australia, many young people have trouble with financial literacy, <a href="https://journal.spera.asn.au/index.php/AIJRE/article/view/6">especially young people</a> in lower socioeconomic groups, who live in rural areas or who have a language background other than English. </p>
<p>According to Scott Pape — author of the Barefoot Investor and whose program Money Movement is screening on <a href="https://www.dailytelegraph.com.au/education-new-south-wales/barefoot-investor-scott-pape-brings-financial-literacy-into-nsw-schools/news-story/bc848d9915d93233ca76b7b239a5aa77">Foxtel’s Lifestyle Channel</a> — most children don’t learn the necessary financial skills they need at school. More than 100,000 people have signed his <a href="https://www.change.org/p/australian-state-governments-it-s-time-to-kick-the-banks-out-of-schools-and-teach-kids-real-money-skills?recruiter=1210900675&recruited_by_id=fffc3ee0-cbc1-11eb-9c44-8d2b44c61d46&utm_source=share_petition&utm_medium=copylink&utm_campaign=petition_dashboard">recently launched petition</a> to bring a “financial revolution” to schools.</p>
<p>There is no independent financial literacy strand in the Australian Curriculum, but a sub-strand exists within maths. This is clearly not enough. The <a href="https://research.acer.edu.au/cgi/viewcontent.cgi?article=1049&context=ozpisa">financial literacy performance of Australian 15 year olds’</a> in the OECD’s 2018 Programme for International Student Assessment (PISA) financial literacy assessment fell by by 15 points (or half a year of schooling) since 2012.</p>
<p><div data-react-class="Tweet" data-react-props="{"tweetId":"1285391520481153024"}"></div></p>
<p>And yet, the draft of the revised Australian Curriculum downgrades financial literacy even further.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/teaching-kids-about-maths-using-money-can-set-them-up-for-financial-security-85327">Teaching kids about maths using money can set them up for financial security</a>
</strong>
</em>
</p>
<hr>
<h2>What’s changed?</h2>
<p>The current maths curriculum includes some content providing teachers with explicit direction to teach fundamental financial concepts. These include representing monetary values, rounding up to the nearest five cents, or solving simple and compound interest problems. </p>
<p>For example, in the <a href="https://www.australiancurriculum.edu.au/media/7046/mathematics_comparative_information_7-10.pdf">current year 10 curriculum</a>, students are required to</p>
<blockquote>
<p>Connect the compound interest formula to repeated applications of simple interest using appropriate digital technologies.</p>
</blockquote>
<p>This is a clear description of the need for teachers to help develop essential financial maths knowledge and skills. </p>
<p>The Australian Curriculum, Assessment and Reporting Authority in April released a draft of the <a href="https://www.australiancurriculum.edu.au/consultation/">proposed revised curriculum</a> for consultation. The above <a href="https://www.australiancurriculum.edu.au/media/7046/mathematics_comparative_information_7-10.pdf">year 10 content has changed</a> to students having to:</p>
<blockquote>
<p>use formulas involving exponents and real numbers to solve practical problems (including financial contexts) involving growth and decay and solve using digital tools as appropriate.</p>
</blockquote>
<p>This wording no longer ensures students are taught about social aspects of, as well as how to calculate, compound interest. Previously it was the teacher’s discretion as to how they taught exponential growth and decay. Currently teachers are likely using transmission of COVID as the context to teach these concepts. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/409818/original/file-20210706-21-xq88fw.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="Four stacks of coins of various heights in front of a clock." src="https://images.theconversation.com/files/409818/original/file-20210706-21-xq88fw.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/409818/original/file-20210706-21-xq88fw.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/409818/original/file-20210706-21-xq88fw.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/409818/original/file-20210706-21-xq88fw.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/409818/original/file-20210706-21-xq88fw.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/409818/original/file-20210706-21-xq88fw.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/409818/original/file-20210706-21-xq88fw.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">The current curriculum explicitly says year 10 students must learn about compound interest but the new curriculum doesn’t.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/time-saveing-value-money-coin-clock-1012303318">Shutterstock</a></span>
</figcaption>
</figure>
<p>In terms of what students should achieve by the end of each year, the proposed curriculum has also removed explicit mentions to financial literacy. For instance, in the current curriculum, by the end of year 7 students will</p>
<blockquote>
<p>[…] solve problems involving percentages and […] operations with fractions and decimals. They compare the cost of items to make financial decisions. Students represent numbers using variables. </p>
</blockquote>
<p>In the proposed curriculum, students by the end of year 7</p>
<blockquote>
<p>[…] solve problems involving rational numbers, percentages and ratios and explain their choice of representation of rational numbers and results when they model situations, including those in financial contexts.</p>
</blockquote>
<p>Again, this doesn’t mean they will learn about financial matters — they might.</p>
<h2>Why does this matter?</h2>
<p>One <a href="https://www.australiancurriculum.edu.au/consultation">aim of the curriculum review </a> is to declutter content. This may be why applications of maths have been relegated to optional status. </p>
<p>By making financial concepts mere examples, the number of content descriptions decreases. This might provide the appearance the quantity of maths has decreased. But teachers still need to provide students with a context in which to apply their maths skills.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/a-crowded-curriculum-sure-it-may-be-complex-but-so-is-the-world-kids-must-engage-with-157690">A 'crowded curriculum'? Sure, it may be complex, but so is the world kids must engage with</a>
</strong>
</em>
</p>
<hr>
<p>Systematically teaching financial concepts in a maths course can <a href="https://connect.springerpub.com/content/sgrjfcp/30/2/313">improve the financial outcomes</a> of more disadvantaged students. But research <a href="https://ro.ecu.edu.au/ajte/vol42/iss5/4/">shows there is a diversity</a> in practising teachers’ ability to identify and interpret opportunities for teaching financial literacy in curriculum. </p>
<p>If financial literacy is left as an example, not all teachers will see the same opportunities for teaching it and financial teaching will be haphazard across schools, and classrooms.</p>
<p><div data-react-class="Tweet" data-react-props="{"tweetId":"1034687007941746688"}"></div></p>
<p>The issue is further complicated by the fact 38% of maths teachers in years 7-10 are <a href="https://research.acer.edu.au/policyinsights/6/">not qualified in maths</a> or maths teaching. Teaching financial maths for these teachers will be much more difficult if there are no explicit guidelines in the curriculum.</p>
<p>After Scott Pape’s lobbying <a href="https://education.nsw.gov.au/news/latest-news/-treasurer-s-new-financial-literacy-challenge">New South Wales</a> announced from term 3 all school children could participate in a “financial literacy challenge” to encourage them to develop positive money habits and increase their financial literacy. </p>
<p>But teachers will still need time to teach these programs. So the elements that have been removed from the curriculum to declutter it will then reappear in the form of additional teaching programs.</p>
<p>The Australian Curriculum provides the content all teachers are required to teach. While many states and territories then reflect this in their own syllabuses or curriculum documents, they all use the national curriculum as the basis.</p>
<p>If the Australian Curriculum doesn’t value financial maths, then other states and territories can choose not to include it. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/proposed-new-curriculum-acknowledges-first-nations-view-of-british-invasion-and-a-multicultural-australia-160011">Proposed new curriculum acknowledges First Nations' view of British 'invasion' and a multicultural Australia</a>
</strong>
</em>
</p>
<hr>
<p>Once the revised Australian Curriculum is released, other states and territories will begin their processes of redeveloping their own curricula. A structured financial literacy program may need to be created, even more so in Queensland where the national curriculum is adopted as it is written.</p>
<p>We need to ensure the Australian Curriculum keeps the explicit language to embed financial literacy concepts into maths lessons. This way, kids will grow up with the financial knowledge they need to make important decisions and participate meaningfully in society and the economy.</p><img src="https://counter.theconversation.com/content/163110/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The national curriculum expects teachers to teach some maths concepts through a financial lens. The revised curriculum includes the financial lens as an example teachers can use, if they choose to.Emily Ross, Lecturer, Curriculum and Pedagogy, University of the Sunshine CoastMargaret Marshman, Senior lecturer mathematics and physics education, University of the Sunshine CoastLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1510932020-12-03T19:06:35Z2020-12-03T19:06:35ZWe don’t need banks teaching kids about money. Schools have it covered<p>The Victorian government this week <a href="https://www.jamesmerlino.com.au/media-releases/school-banking-programs-to-be-banned/">announced</a> it would ban all banking schemes from operating in public schools from 2021. </p>
<p>This includes the controversial <a href="https://www.commbank.com.au/banking/kids/dollarmites.html">Dollarmites</a> program, run by Commonwealth Bank, which teaches primary school children to save money and develop banking habits. Often, this is done by opening an account with the bank. </p>
<p>The Victorian government will replace these bank-led programs with school-led financial literacy programs.</p>
<p>Given the <a href="https://download.asic.gov.au/media/5285317/asic-consultation-paper-323-review-of-school-banking-programs.pdf">lack of evidence</a> school banking programs lead to better financial literacy, their removal won’t have much impact on children’s learning. In fact, it might be the impetus schools need to take financial literacy education more seriously.</p>
<h2>How financial literacy has changed in Australia</h2>
<p>Many families and school communities participate in school banking simply because it is a tradition. In 2019, the <a href="https://www.abc.net.au/news/2019-02-20/dollarmites-program-out-of-schools-aeu-push-banking/10806554">ABC reported</a> nearly two-thirds of the nation’s schools participate in school banking programs. The most well known is delivered by the Commonwealth Bank.</p>
<p>The incentive of cash payments to schools has contributed to the survival of the schemes despite a lack of evidence they do, in fact, improve children’s financial literacy skills. It was revealed in 2018, the Commonwealth Bank had paid a total of almost <a href="https://www.abc.net.au/news/2018-10-02/commonwealth-bank-dollarmite-accounts/10315746?nw=0">$400,000 to state schools</a> across Queensland in a bid to encourage more students to join its banking program the year before.</p>
<p>At best, such programs promote saving habits, which can be taught by parents. At worst they are an administrative burden and a potential disruption to the flow of teaching and learning in Australian classrooms. </p>
<p><div data-react-class="Tweet" data-react-props="{"tweetId":"960994339286523912"}"></div></p>
<p>The Commonwealth Bank <a href="https://www.commbank.com.au/banking/school-banking/information-for-schools.html#:%7E:text=Established%20in%201931%2C%20School%20Banking,wallet%20on%20School%20Banking%20day.">established its school banking program</a> in 1931 to teach “money-management” skills to primary school students. But life has changed significantly since then. </p>
<p>We are rapidly moving towards a <a href="https://mozo.com.au/bank-accounts/articles/australians-shun-cash-in-2020-but-70-still-oppose-cashless-society">cashless society</a> and the money-management skills required last century have evolved to significantly more <a href="https://www.ato.gov.au/about-ato/research-and-statistics/in-detail/general-research/the-case-for-teaching-and-learning-about-taxation-and-superannuation-at-school/?page=4">complex consumer and financial literacy</a> skills. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/should-banks-play-a-role-in-teaching-kids-about-how-to-manage-money-effectively-67775">Should banks play a role in teaching kids about how to manage money effectively?</a>
</strong>
</em>
</p>
<hr>
<p>Along with basic money management, students leave school needing to understand the financial implications of subscriptions to services such as gym memberships, mobile phone plans and even TV streaming services. They need to understand credit card debt, buy-now-pay-later schemes, <a href="https://www.studyassist.gov.au/help-loans/hecs-help">student loans</a>, superannuation, taxation and of course the traditional lending structures of personal loans and mortgages. </p>
<h2>Where is financial literacy in the curriculum?</h2>
<p>It has long been acknowledged financial literacy <a href="https://www.ato.gov.au/about-ato/research-and-statistics/in-detail/general-research/the-case-for-teaching-and-learning-about-taxation-and-superannuation-at-school/?page=4">should be part of the school curriculum</a>. Most recently, this has been supported by the federal and state governments in the <a href="https://docs.education.gov.au/system/files/doc/other/final_-_alice_springs_declaration_-_17_february_2020_security_removed.pdf">2019 Alice Springs (Mparntwe)
Education Declaration</a>. The declaration specifically mentions the importance of developing strong financial skills among Australian students. </p>
<p>While the Australian Curriculum doesn’t have an explicit financial literacy curriculum, it provides a <a href="https://www.australiancurriculum.edu.au/resources/curriculum-connections/portfolios/consumer-and-financial-literacy/">range of resources</a> to help teachers implement financial literacy at all levels of schooling.</p>
<p>One of these resources is the <a href="http://www.curriculum.edu.au/verve/_resources/National_Consumer_Financial_Literacy_Framework_FINAL.pdf">Consumer and Financial Literacy Framework</a>, which includes a strong rationale for financial literacy education in Australian schools, along with guidance on the progression of learning from the first year of school through to senior secondary.</p>
<p>Financial literacy education is embedded in the curriculum in two ways. First, it appears explicitly in several subject areas: <a href="https://www.australiancurriculum.edu.au/resources/curriculum-connections/dimensions/?Id=45717&YearLevels=42680">mathematics</a>, economics and business. </p>
<p>Within maths, children learn about the value of money. They learn to: </p>
<ul>
<li><p>solve problems involving money</p></li>
<li><p>manage money by creating budgets</p></li>
<li><p>explore and calculate percentage discounts</p></li>
<li><p>work out the best value when making purchases</p></li>
<li><p>choose financial products and solve problems that involve simple and compound interest, and profit and loss. </p></li>
</ul>
<p>In economics and business, students learn how to make responsible and informed decisions about consumer issues, money management and assets. </p>
<p>Secondly, the <a href="https://www.australiancurriculum.edu.au/f-10-curriculum/general-capabilities/">Australian Curriculum General Capabilities </a> and <a href="https://www.australiancurriculum.edu.au/f-10-curriculum/cross-curriculum-priorities/">Cross Curriculum Priorities </a> describe the overarching skills, knowledge, behaviours and dispositions necessary for the development of successful and active citizens. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/372726/original/file-20201203-15-cft806.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="Boy putting a coin into piggy bank." src="https://images.theconversation.com/files/372726/original/file-20201203-15-cft806.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/372726/original/file-20201203-15-cft806.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=338&fit=crop&dpr=1 600w, https://images.theconversation.com/files/372726/original/file-20201203-15-cft806.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=338&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/372726/original/file-20201203-15-cft806.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=338&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/372726/original/file-20201203-15-cft806.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=424&fit=crop&dpr=1 754w, https://images.theconversation.com/files/372726/original/file-20201203-15-cft806.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=424&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/372726/original/file-20201203-15-cft806.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=424&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Financial literacy is about a lot more than just teaching kids how to save.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/little-boy-putting-pocket-money-piggy-1100944310">Shutterstock</a></span>
</figcaption>
</figure>
<p>Financial literacy is embedded in each of these two structures and teachers have the opportunity to use relevant learning tasks. For example, primary students in <a href="https://researchdirect.westernsydney.edu.au/islandora/object/uws:35574/">one study</a> borrowed money from their school principal to design and conduct a market stall. </p>
<p>To do this, they had to come up with a business plan, understand their break-even point, and market and sell their products to other students at the school. The students then had to repay their debt to the principal before deciding on how to spend their profits. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/dont-bank-on-dollarmites-to-teach-financial-literacy-here-are-our-alternatives-112213">Don't bank on Dollarmites to teach financial literacy: here are our alternatives</a>
</strong>
</em>
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<p>This rich experience addressed several aspects of the maths curriculum while teaching the students about important financial literacy concepts. It was also authentic and engaging. It provided students with a sense of agency when they were able to use their profits to buy and donate Christmas gifts for needy children.</p>
<h2>Do we need to do more?</h2>
<p>While financial literacy is embedded into the curriculum, there is more work to be done inside and outside schools. Schools need to make sure financial literacy is explicitly taught in conjunction with key subject areas. A way to ensure this happens is to have it made more explicit in the Australian Curriculum. </p>
<p><a href="https://onlinelibrary-wiley-com.ezproxy.uws.edu.au/doi/full/10.1111/j.1741-3729.2010.00616.x">Parents influence</a> their children’s financial behaviours. Unfortunately we can’t assume all parents have sound financial literacy, nor can we assume all teachers do. </p>
<p>Financial literacy education for the broader community is critical if we are to ensure parents model positive financial behaviour to their children. ASIC’s <a href="https://moneysmart.gov.au/">MoneySmart</a> website is a good place for parents to improve their financial literacy.</p>
<p>Likewise, teachers must have the opportunity to engage with professional development to increase their personal financial capabilities, as well as their ability to incorporate financial literacy into their teaching.</p><img src="https://counter.theconversation.com/content/151093/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Catherine Attard received funding from Financial Literacy Australia in 2014 to conduct research on financial literacy and mathematics in primary schools. </span></em></p>There’s a lack of evidence school banking programs lead to better financial literacy. And their removal in Victoria might be the impetus schools need to take financial education more seriously.Catherine Attard, Associate Professor, Mathematics Education, Western Sydney UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1122132019-02-22T05:49:11Z2019-02-22T05:49:11ZDon’t bank on Dollarmites to teach financial literacy: here are our alternatives<figure><img src="https://images.theconversation.com/files/260341/original/file-20190222-195870-17bnfyg.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Research shows combining maths education and financial literacy concepts is a better way to teach children good financial habits and boost numeracy.</span> <span class="attribution"><span class="source">www.shutterstock.com</span></span></figcaption></figure><p>The recent <a href="https://financialservices.royalcommission.gov.au/Pages/default.aspx">royal commission into banking</a> has revealed rampant wrongdoing by the big banks. As a result, there is <a href="https://www.abc.net.au/news/2019-02-20/dollarmites-program-out-of-schools-aeu-push-banking/10806554">renewed public interest</a> in school banking schemes. The Commonwealth Bank’s <a href="https://www.commbank.com.au/banking/school-banking.html#terms">Dollarmites</a> program has once again come into the spotlight. </p>
<p>Dollarmites was awarded a 2018 <a href="https://www.choice.com.au/shonky-awards/hall-of-shame/shonkys-2018/commonwealth-bank-dollarmites">Choice Magazine</a> Shonky award. The program has over 300,000 active participants, and although it’s not the only school banking program, it’s the largest by far.</p>
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Read more:
<a href="https://theconversation.com/should-banks-play-a-role-in-teaching-kids-about-how-to-manage-money-effectively-67775">Should banks play a role in teaching kids about how to manage money effectively?</a>
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<p><a href="https://www.commbank.com.au/banking/school-banking.html#terms">According to the Commonwealth Bank</a>, the motive behind the Dollarmites program is to teach good savings habits and develop financial literacy. But I could find little independent research evidence it actually does.</p>
<p>On the surface, the Commonwealth Bank’s intentions are good. But <a href="https://www.abc.net.au/life/how-to-switch-banks/10007610">research</a> has found 40% of people develop loyalty to their banks and continue banking with them into adulthood.</p>
<p>We need to consider other options. Here are some research-backed alternatives.</p>
<h2>Alternatives to school banking</h2>
<p>Financial literacy can be taught both at home and at school, in practical and meaningful ways. If we consider the core business of schools to be learning, then our classrooms are not an appropriate place for the distractions of corporate marketing. There is definitely no time to be wasted on the logistics of organising school banking. </p>
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<a href="https://theconversation.com/financial-literacy-is-a-public-policy-problem-84695">Financial literacy is a public policy problem</a>
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<p>In fact, schools have several options when it comes to teaching financial literacy. There are a number of free resources already aligned to the curriculum. </p>
<p>In <a href="https://www.moneysmart.gov.au/media/560516/moneymathematicsengagement_final_report_14_september_2016-assoc-prof-catherine-attard.pdf">my research</a>, using ASIC’s <a href="https://www.moneysmart.gov.au/teaching/how-teachers-can-use-moneysmart">MoneySmart</a> resources, financial literacy was combined with maths. Students did activities that allowed them to deal with real money while applying maths skills. </p>
<p>For example, some students borrowed money from the school principal to set up small businesses. They then ran their business at a school market day, and used their profits to buy Christmas gifts for underprivileged children. </p>
<p>Simple activities such as setting up classroom economies or allowing children to help plan events (such as class excursions) are also excellent at engaging children in financial literacy in a fun, realistic and interactive way.</p>
<p>Findings from my study showed learning about money and maths improved engagement, understanding of mathematical concepts and knowledge of financial concepts such as budgeting, profit and loss, lending and interest. </p>
<p>There are also resources such as <a href="https://www.banqer.com.au/">Banqer</a>, a free subscription-based app that allows students to manage fictitious money to budget and cover expenses (such as “renting” a desk). In my professional opinion, apps such as this are high quality. They may have corporate sponsorships, but are offered brand-free, which is preferable. </p>
<h2>Parents can teach financial literacy too</h2>
<p><a href="https://www.igrad.com/articles/childhood-money-habits-learned-from-parents">Parents</a> are one of the biggest influences on the financial habits of children. Parents have a responsibility to model good financial behaviours.</p>
<p>Involving children in shopping, having discussions about family budgeting and encouraging children to save some of their pocket money using a bank account of their choice all <a href="https://www.moneysmart.gov.au/media/560516/moneymathematicsengagement_final_report_14_september_2016-assoc-prof-catherine-attard.pdf">contribute</a> to the development of financial literacy. These are really simple, everyday things parents can do to help their children learn financial literacy.</p>
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Read more:
<a href="https://theconversation.com/teaching-kids-about-maths-using-money-can-set-them-up-for-financial-security-85327">Teaching kids about maths using money can set them up for financial security</a>
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<img src="https://counter.theconversation.com/content/112213/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Catherine Attard has previously provided advice to the MoneySmart program. In 2015 she was awarded funding from Financial Literacy Australia. </span></em></p>There are better ways to teach financial literacy than through school banking schemes.Catherine Attard, Associate Professor, Mathematics Education, Western Sydney UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/853272017-10-25T19:06:31Z2017-10-25T19:06:31ZTeaching kids about maths using money can set them up for financial security<figure><img src="https://images.theconversation.com/files/191138/original/file-20171020-1082-atxtty.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">There are plenty of opportunities when you are out shopping to include your child in discussions about financial decisions.</span> <span class="attribution"><span class="source">Shutterstock</span></span></figcaption></figure><p><em>As the world of finance becomes more complex, most of us aren’t keeping up. In this series we’re exploring <a href="https://theconversation.com/au/topics/what-is-financial-literacy-45200">what it means to be financially literate</a>.</em></p>
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<p>One of the most common complaints children have about learning maths is its lack of relevance to their lives outside school. When they fail to see the importance of maths to their current and future lives, they often <a href="https://link.springer.com/article/10.1007/s13394-011-0020-5">lose interest</a>. </p>
<p>This results in opting out of mathematics study as soon as they can, and proclaiming they are <a href="https://theconversation.com/saying-im-not-good-at-maths-is-not-cool-negative-attitudes-are-affecting-business-53298">“not good at maths”</a>.</p>
<p>Financial literacy – learning about budgeting, saving, investing and basic financial decision making – taught by both parents and teachers can help keep them engaged.</p>
<h2>Three strategies for teachers</h2>
<p><a href="http://www.aamt.edu.au/">The Australian Association of Mathematics Teachers</a> promote the teaching of financial literacy through maths with the help of contemporary teaching and learning resources that reflect students’ interests. These include lesson plans, units of work, children’s literature, and interactive digital resources such as games.</p>
<p>A wide range of resources are available from websites such as <a href="https://www.moneysmart.gov.au/">MoneySmart</a> and <a href="http://finlit.org.au/resources/programs-and-information/">Financial Literacy Australia</a>. These are an excellent way to begin teaching financial literacy concepts, with some units of work specifically designed with a mathematics focus. However, these units can and should be adjusted to suit the specific needs of the students in your classroom.</p>
<p>Additionally, teachers should consider using resources that are familiar to students’ everyday lives. These could include items that are in the news media, shopping catalogues, television commercials etc. Keep watch for interesting photographs or misleading advertisements. They are great for starting discussions about maths. Questions such as “is this really a good deal?”, “what is the best deal?” or even “what mathematics do we need to know and understand to work out if this advertisement is offering a bargain?” could begin discussions. </p>
<p>There are also a range of apps that could be used alongside maths and financial literacy explorations, including budgeting apps and supermarket apps such as <em>TrackMySpend</em>, <em>Smart Budget</em>, or <em>My Student Budget Planner</em> . If you like using picture books to introduce and teach concepts, the <a href="http://moneyandstuff.info/books/">Money & Stuff website</a> has an extensive list of books relating to financial literacy.</p>
<h2>The money connection</h2>
<p>One way to improve engagement with mathematics is for schools to teach it in ways that children are familiar with. Most children are familiar with money, and many are already consumers of financial services from a young age. <a href="https://www.acer.org/files/PISA_2012_Financial_Literacy.pdf">Research</a> has found that it’s not uncommon for children to have accounts with access to online payment facilities or to use mobile phones during the primary school years. It’s clear that financial literacy and mathematics skills would be beneficial when using such products.</p>
<p><a href="http://www.bea.asn.au/cms/files/cms_files/content/Financial_literacy/NationalConsumerFinancialLiteracyFramework_2011.pdf">Financial education</a> programs for young people can be essential in nurturing sound financial knowledge and behaviour in students from a young age. <a href="https://eric.ed.gov/?id=ED572577">Using real-life contexts</a> involving financial literacy can help children learn a range of mathematical concepts and numeracy skills like lending and borrowing, budgeting, and interest rates. They are more likely to remember and understand what they have learned because they applied mathematics to something they’re interested in and something that they can use in their lives. </p>
<p><a href="https://www.moneysmart.gov.au/media/560516/moneymathematicsengagement_final_report_14_september_2016-assoc-prof-catherine-attard.pdf">Research</a> into the teaching of financial literacy combined with mathematics in primary schools shows how important it is for all children to understand the importance and value of money and recognise the maths that underpins consumer and financial literacy. </p>
<p>They also need to engage in real world projects and investigations relating to consumer and financial literacy to understand how mathematics is applied in everyday decisions that could influence life opportunities.</p>
<h2>Shopping is a teaching opportunity for parents</h2>
<p>Many young children don’t understand where money comes from. It’s important that they begin to develop some understanding of how our economy works, even from a young age. <a href="https://www.moneysmart.gov.au/media/560516/moneymathematicsengagement_final_report_14_september_2016-assoc-prof-catherine-attard.pdf">Research</a> has found a pattern emerging where children whose parents talk to them about money develop an earlier understanding of its importance. They are also provided with more opportunities to deal with making decisions about money. </p>
<p>If you have young children in primary school, it’s a great time to start their financial literacy and mathematics education. There are plenty of opportunities when you are out shopping to include your child in discussions and decisions where appropriate, or explain the financial decisions you make on their behalf. Talk about the mathematics involved in financial decision-making. Where possible, encourage children to make their own financial decisions with things like pocket money or savings. If you feel you need to improve your own financial literacy first, there are many <a href="https://www.moneysmart.gov.au/">resources</a> available for adults. </p>
<p>Teaching children about money through mathematics helps children learn. It helps them use mathematics in real-life scenarios and, more importantly, can help set them up for future financial security.</p><img src="https://counter.theconversation.com/content/85327/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Catherine Attard received a grant from Financial Literacy Australia in 2014 to investigate the use of financial literacy education to improve student engagement with mathematics in primary schools from low socio-economic areas. </span></em></p>Learning about real-life money decisions from a young age helps kids learn maths and improves their financial literacy.Catherine Attard, Associate Professor, Mathematics Education, Western Sydney UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/783322017-05-26T00:04:51Z2017-05-26T00:04:51ZWhy is Australian 15-year-olds’ financial literacy declining?<figure><img src="https://images.theconversation.com/files/170944/original/file-20170525-23232-1ozb54c.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Teenagers don't know as much as they should about managing money. </span> <span class="attribution"><span class="source">from shutterstock.com </span></span></figcaption></figure><p>Around a fifth of 15-year-olds in Australia do not have basic financial literacy, according to a new OECD Programme for International Student Assessment (PISA) <a href="http://research.acer.edu.au/ozpisa/27/?__hstc=227787458.14ed1ab3be3183379f4ad95df89731f9.1489013362204.1490002521759.1495667339458.3&__hssc=227787458.7.1495667339458&__hsfp=3839247555">financial literacy assessment results</a> report.</p>
<p>Financial literacy is defined by the OECD as:</p>
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<p>Knowledge and understanding of financial concepts, and the skills, motivation and confidence to apply such knowledge and understanding in order to make effective decisions across a range of financial contexts, to improve the financial wellbeing of individuals and society, and to enable participation in economic life.</p>
</blockquote>
<p>This topic has an elevated status in the <a href="http://www.australiancurriculum.edu.au/">Australian curriculum</a>, particularly within maths and humanities.</p>
<p>However, the report showed that young people are doing worse in this area now than previously. In particular, students struggled to read payslips and detect financial scams.</p>
<p>Low socioeconomic background, attending a rural and remote school, and Indigeneity influenced students’ financial literacy performance. Interestingly, girls outperformed boys.</p>
<p>So why the gaps and why is performance declining?</p>
<h2>Conventional approaches are driven by the finance industry</h2>
<p>OECD <a href="http://www.oecd.org/daf/fin/financial-education/2012%20Schools%20Guidelines.pdf">Guidelines on Financial Education in Schools</a> argue that the younger generation face increasingly complex financial problems. This is why there is a need to teach students skills and knowledge related to finance from a young age, to help them engage in society in later life.</p>
<p>The most important financial decisions people face involve choices - about work, study, transport, housing, insurances and investments. These choices are influenced by complex and changing economic and financial realities. This means there is a need to focus on basic skills and capabilities that will equip students to be critically informed in managing their money.</p>
<p>Since the 2007 global financial crisis, the Australian government has invested more than A$10 million in the <em>Helping our Children Understand Finance</em> policy and other related initiatives. </p>
<p>This work is led by the Australian Securities and Investments Commission (ASIC). Key to ASIC’s work in this area has been creating the MoneySmart brand. </p>
<p>The <a href="https://www.moneysmart.gov.au/">MoneySmart website</a> is marketed as a “one stop shop” for all things money-related and includes resources for schools and teachers.</p>
<p>The Commonwealth Bank’s <a href="http://www.startsmart.com.au/home/startsmart-programs/">Start Smart program</a> takes a similar approach, with guest workshops facilitated by bank employees. The Commonwealth Bank has a long history of recruiting customers at a young age through its school banking program.</p>
<p><a href="https://theconversation.com/should-banks-play-a-role-in-teaching-kids-about-how-to-manage-money-effectively-67775">This approach</a> to financial literacy education, which provides “one size fits all” lessons, <a href="http://www.sciencedirect.com/science/article/pii/S1477388014000176">has been critiqued</a> as missing the mark. Sure, some topics are generic, but local real world problems can vary significantly.</p>
<p>For example, a teacher recently explained to me that some of his secondary students were trading bitcoin. Meanwhile, teacher colleagues in rural communities were concerned about their students’ family farms and financial futures. These stories show that teachers are tuned in to their students’ financial literacy learning needs and interests.</p>
<p><a href="http://researchdirect.westernsydney.edu.au/islandora/object/uws:35574">A recent evaluation</a> exploring the potential of MoneySmart in low socioeconomic schools recommended that teaching resources should be reviewed. The report highlighted the value of working with teachers to develop real world mathematics lessons that fit local needs and interests, while exploring ways teaching practice might be enhanced. </p>
<p>With declining financial literacy results, it’s time to question whether conventional approaches are working. </p>
<p>New initiatives that do more to involve teachers in thinking about and planning for student financial literacy learning may have a greater impact. </p>
<h2>Students want lessons they can relate to</h2>
<p>Around 79% of Australian students have a bank account. What students then need to know about are the types of financial products and services available, and the risks and rewards they might bring. </p>
<p><a href="https://link.springer.com/article/10.1007/s13394-016-0184-0">My research</a> has shown that even primary school students value real world financial literacy learning experiences where they deem the tasks to be useful to their lives beyond school. </p>
<p>Such lessons involve practical tasks like applying literacy and numeracy to making sense of information that is presented in different formats. </p>
<p>Depending on the school, lessons that involve making decisions about takeaway menus, public transport pricing and mobile phone plans can be explored in Years 5 and 6, when students are beginning to <a href="http://pubsonline.informs.org/doi/abs/10.1287/mnsc.2013.1849">think about using these services</a> themselves. </p>
<p>In secondary school, teaching and learning should continue to be dynamic and timely. For example, students need to learn to keep track of their money electronically, pose questions and think critically when interacting with banks, and protect their personal information from scams.</p>
<h2>Schools and teachers need support</h2>
<p><a href="http://www.fsa.gov.uk/pubs/consumer-research/crpr69.pdf">Behavioural economics research</a> shows that financial behaviour may depend as much on intrinsic values and attitudes learned at home as the knowledge and skills acquired at school. </p>
<p>This explains why the real impact of high school financial education on financial decision-making beyond school is difficult to measure. </p>
<p>There is little Australian educational research exploring how teachers make sense of this subject area - and how they approach it.</p>
<p>Australia is a diverse society in which <a href="http://www.publishing.monash.edu/books/cge.html">socioeconomic marginalisation and low educational achievement</a> tend to go hand in hand. This means that “one size fits all” approaches don’t always fit local circumstances.</p>
<p><a href="http://ro.ecu.edu.au/ajte/vol42/iss5/4/">My work with teachers</a> has revealed that feeling financially literate and being able sensitively to teach financial problem-solving and decision-making to students are two different things. </p>
<p>For example, in a project involving more than 30 primary school teachers, the majority agreed that they were financially literate. But only about half indicated being confident about teaching financial literacy. </p>
<p>Teachers want access to quality professional learning to help them navigate the Australian curriculum and develop their teaching. Teacher associations do a great job at supporting teachers in this work.</p><img src="https://counter.theconversation.com/content/78332/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Carly Sawatzki does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Around a fifth of 15-year-olds in Australia do not have basic financial literacy.Carly Sawatzki, Lecturer, Monash UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/677752016-10-31T18:59:52Z2016-10-31T18:59:52ZShould banks play a role in teaching kids about how to manage money effectively?<figure><img src="https://images.theconversation.com/files/143611/original/image-20161028-11239-1o2n6is.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Australian schoolchildren are being taught financial literacy through programs often run by big banks.</span> <span class="attribution"><span class="source">from www.shutterstock.com</span></span></figcaption></figure><p>The Commonwealth Bank has long been active in the space of financial literacy - that is, educating young people about the importance of managing money effectively. </p>
<p>Just recently it announced an overhaul to its “<a href="http://www.startsmart.com.au/home/startsmart-programs/">Start Smart</a>” financial literacy programs, which aim to teach children about money. </p>
<p>The program <a href="http://www.theage.com.au/business/workplace-relations/commonwealth-bank-to-teach-female-students-a-man-is-not-a-plan-20161020-gs6iat.html">reportedly includes</a> showing children that “a man is not a plan” by discussing financial inequality and offering <a href="https://www.commbank.com.au/guidance/newsroom/our-watch-start-smart-review-201610.html">positive representations of women</a> managing money. </p>
<p>The catch phrase seems progressive but is loaded with assumptions about women, men, their relationships, and their financial choices. This downplays the economic and social reasons why women’s financial opportunities and experiences tend to differ from men’s. </p>
<h2>Pay gap in the workplace</h2>
<p>It’s a bold ambition when you consider the broader context. According to the <a href="https://www.wgea.gov.au/sites/default/files/Gender_Pay_Gap_Factsheet_final.pdf">Workplace Gender Equality Agency</a>, the highest gender pay gap actually occurs in the financial and insurance services industry, where senior management positions continue to be male dominated and the difference between women’s and men’s earnings is 30.2%. </p>
<p>Further, when comparing Indigenous females to non-Indigenous male workers with median incomes, the reported <a href="http://onlinelibrary.wiley.com/doi/10.1111/1759-3441.12154/full">superannuation gap</a> is 39%.</p>
<p>Such programs, like the one Commonwealth Bank is offering, are based on the assumption that a combination of guest speakers visiting schools and downloadable resources hold the key to improving financial literacy teaching and learning. </p>
<h2>Why are banks getting involved?</h2>
<p>The federal government has invested millions of dollars and entrusted the Australian Securities and Investments Commission (ASIC) to lead initiatives intended to help children understand finance. </p>
<p>We have a <a href="http://www.curriculum.edu.au/verve/_resources/National_Consumer_Financial_Literacy_Framework_FINAL.pdf">National Consumer and Financial Literacy Framework</a>, which foreshadowed the development of the <a href="http://www.australiancurriculum.edu.au/">Australian Curriculum</a>. </p>
<p>We also have consecutive <a href="http://www.financialliteracy.gov.au/media/546585/report-403_national-financial-literacy-strategy-2014-17.pdf">National Financial Literacy Strategies</a> led by ASIC, that are intended to drive improvements in the way financial literacy is taught and learned in schools. </p>
<p>Consumer and financial literacy has an elevated status across the Australian curriculum, signalling opportunities for interdisciplinary approaches, particularly in mathematics and economics and business.</p>
<p>Financial literacy projects are big business for consultancies. And for banks, manoeuvring under the guises of corporate social responsibility serves to position brands favourably. </p>
<p>The ANZ bank, for example, conducts its <a href="https://www.anz.com/resources/5/4/54720a2d-a540-49f0-b0a7-62f1ffb922e6/adult-financial-literacy-survey-summary.pdf?MOD=AJPERES">Survey of Adult Financial Literacy</a> every three years. This is considered the leading measure of adult financial literacy in Australia. </p>
<p>And the <a href="http://www.csi.edu.au/media/uploads/Financial_Resilience_in_Australia_-_Full_Report.pdf">National Australia Bank</a> (NAB) recently released research claiming to measure <a href="http://www.tandfonline.com/doi/abs/10.1080/10253866.2014.1000315">financial resilience</a> - weaving socioeconomics and psychology. </p>
<p>These strategies are important to them since their houses are not in order. The <a href="https://theconversation.com/big-four-bank-chiefs-face-parliamentary-committee-experts-react-66400">recent parliamentary inquiry</a> confirmed that the big four banks are troubled by bad behaviour and more effective regulation is needed.</p>
<h2>How do children learn about money management?</h2>
<p>Children tend to learn about money within their <a href="http://www.ingentaconnect.com/content/aea/jel/2014/00000052/00000001/art00001">homes</a> in different ways – and those teaching around this area need to be sensitively attuned to this learning.</p>
<p>Children become socialised and oriented to consumer, economic and financial issues through a series of conversations, observations, and experiences – consciously and unconsciously.</p>
<p>Even primary-aged students make <a href="https://www.merga.net.au/publications/counter.php?pub=pub_conf&id=2148">surprising, insightful comments</a> that show mature understandings about earning, spending, saving, and sharing money. This is particularly true in disadvantaged communities.</p>
<h2>How is financial literacy taught?</h2>
<p>Research into financial literacy education in schools – how it is taught and learned – is an emerging field, typically characterised by <a href="https://www120.secure.griffith.edu.au/research/file/e1d4703a-afbe-40f8-9414-cb3f84121c04/1/2013-05-financial-literacy-and-financial-literacy-programs-in-australia.pdf">program trials and evaluations</a>. </p>
<p>Program evaluations tell short term success stories – the rubber really hits the road when students need to apply their learning in the real world down the track.</p>
<p>In 2012, the OECD and Programme for International Student Assessment (PISA) included a Financial Literacy Assessment for 15-year-old students. Australia ranked fifth out of the 18 participating countries and economies.</p>
<p><a href="https://www.google.com.au/url?sa=t&rct=j&q=&esrc=s&source=web&cd=2&cad=rja&uact=8&ved=0ahUKEwj8g6Ti6_nPAhUBw5QKHVnBD9IQFgghMAE&url=https%3A%2F%2Fwww.acer.edu.au%2Fdocuments%2FPISA-2012-Report.pdf&usg=AFQjCNHbzr3TFbLzzXJiOPdoLwtAM6V_7A">The findings</a> showed that students in city schools achieved higher scores than students in provincial and remote schools; and non-Indigenous students significantly outperformed their Indigenous counterparts.</p>
<p>Teaching kids about managing money is most effective when classroom tasks are <a href="http://link.springer.com/article/10.1057/fsm.2013.16">tailored</a> to meet students’ family backgrounds and interests, and occurs at the <a href="http://pubsonline.informs.org/doi/abs/10.1287/mnsc.2013.1849">point of need</a>.</p>
<p>Students enjoy financial problem solving and decision-making experiences that captivate their imagination, challenge them to think, and prepare them for the real world.</p>
<p>Devising financial literacy lessons that create connections between students’ financial literacy learning at home and at school is hard to do without really knowing the <a href="http://cse.sagepub.com/content/11/3/177.short">local context and students</a>. </p>
<p>Because Australian classrooms are diverse, this stuff rarely comes together “off the shelf”. </p>
<h2>Not reaching the most vulnerable communities</h2>
<p>The uncomfortable truth is that workshops by so-called finance literacy experts and downloadable teaching and learning resources may not reach and resonate with Australia’s most vulnerable communities.</p>
<p>Planning for financial literacy learning requires an understanding of the school community, interdisciplinary navigation of the Australian Curriculum, and skilful <a href="http://s3.amazonaws.com/academia.edu.documents/37597949/Makar_-_in_Gillies__ed__revised_FINAL.pdf?AWSAccessKeyId=AKIAJ56TQJRTWSMTNPEA&Expires=1477620245&Signature=NMd%2F%2BQ9KnvNwi3XO86j2ndQYkLs%3D&response-content-disposition=inline%3B%20filename%3DThe_pedagogy_of_mathematical_inquiry.pdf">inquiry approaches</a>). </p>
<p>This is what teachers are trained to do, although they need and crave quality professional learning to hone their craft. </p>
<p>This is where funding and support are needed.</p>
<p>The <a href="http://www.aqf.edu.au/">Australian Qualifications Framework</a> and <a href="http://www.aitsl.edu.au/australian-professional-standards-for-teachers/standards/list">Professional Standards for Teachers</a> mean teachers have never been more scrutinised and accountable. </p>
<p>When it comes to meeting students’ academic, social and emotional needs on any issue, let’s invest in schools and trust teachers to do what they’re qualified to do.</p><img src="https://counter.theconversation.com/content/67775/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The government has heavily invested in initiatives intended to help children understand finance. But should this be taught by school teachers instead who are sensitive to kid’s backgrounds?Carly Sawatzki, Lecturer, Monash UniversityLevon Ellen Blue, Research fellow, Griffith UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/621532016-08-10T22:24:15Z2016-08-10T22:24:15ZMost students borrow for college, but are they financially literate?<figure><img src="https://images.theconversation.com/files/133698/original/image-20160810-28926-1u1m6pt.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">What do students know when they are taking out loans?</span> <span class="attribution"><a class="source" href="https://www.flickr.com/photos/tulanesally/4307042890/in/photolist-4dtKJ4-2yoy3B-6xzr7k-9NvF6h-7yAHNb-9Nvxqd-7yAJWY-hJ4PdN-9kwJUR-JxagU-hJ4jm8-hJ4KBE-kTVhJn-9gTaXK-Au3cM7-ppwtNG-dvbgfS-7yAExE-9qXzfN-kLfp6u-mSVwpf-diNcwq-5ABxCh-bWRrSj-9NDgMs-5zd2cK-5AxiFe-rKHjzu-7yAJjG-mSUyMc-ebVXh5-5zjWKK-9uTqXW-eUHkF-f2HCYb-hJ5gCE-9V8Y8U-eUHrJ-eUHfb-hJ5i5Y-6e6fd-eUHi6-5r5gVJ-9V8Ya3-eaJE9Z-6jWLuk-hukp3y-dsrWTu-9gWfS7-hJ5h2W">Tulane Public Relations</a>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span></figcaption></figure><p>August is here, and many families are preparing their children for the next academic challenge – a college education.</p>
<p>By and large, a college degree is viewed as an important credential for gainful employment and professional success. At the same time, college is costly, and college financing strategies are complex. </p>
<p>Students and their families use multiple sources to finance college expenses. Most students borrow for their education. Three out of five college students depend on <a href="http://cfw.osu.edu/posts/documents/student-loans-rb01.pdf">student loans</a> to fund their education.</p>
<p>But, do students know the ABCs of financial literacy?</p>
<h2>College finance options</h2>
<p>The college process begins with estimating the full cost of college attendance. This includes tuition, housing and living expenses, such as food, books, cellphone plans and transportation. </p>
<p>The next step is to identify all resources available to pay college expenses, including the expected family contribution, scholarships and grants, college savings and wages from employment – if students plan to work. </p>
<p>Once college costs and available resources are carefully estimated, any shortfall in resources informs the need for borrowing. Scholarships and grants are awarded without strings attached. However, student loans come with an obligation to repay the borrowed amount once the recipient is no longer enrolled full-time.</p>
<p><a href="http://www.usnews.com/education/best-colleges/paying-for-college/articles/2012/08/13/6-steps-to-determine-how-much-to-borrow-for-college">Guidelines</a> for responsible student loan use recommend minimizing the loan amount in order to have less debt to be repaid. </p>
<p>Decisions made by college students and their families regarding loans have direct and significant consequences during adulthood. </p>
<p>The inability to manage student loan repayment along with other financial obligations (i.e., housing, food, utilities, transportation) has been shown to impact <a href="https://journals.ohiolink.edu/pg_200?::NO:200:P200_ARTICLEID:320019797">career choice</a>, <a href="http://www.journals.uchicago.edu/doi/abs/10.1086/684587">home ownership</a>, <a href="http://link.springer.com/article/10.1007/s13524-014-0333-6">marriage</a>, <a href="http://www.tandfonline.com/doi/abs/10.1080/09645292.2010.545204">additional education</a>, <a href="https://research.stlouisfed.org/publications/review/13/09/Elliott.pdf">financial health</a> and overall <a href="https://journals.ohiolink.edu/pg_200?::NO:200:P200_ARTICLEID:334458608">quality of life</a>.</p>
<p>So, how do students decide the amount to borrow? What rules of thumb or strategies are used? How is use of these strategies related to financial knowledge? </p>
<h2>How students make borrowing decisions</h2>
<p>We lead the <a href="http://cfw.osu.edu/study-on-collegiate-financial-wellness/">Study on Collegiate Financial Wellness</a> (SCFW), which surveys a random sample of undergraduate students in order to understand their financial behaviors, decisions and wellness. Data from our study provide insights to these questions.</p>
<p>The 2014 SCFW study, with the most recent information from nearly 19,000 college students studying at 51 public and private four-year and two-year institutions, found that the majority of college students with student loans use one or more strategies to minimize the amount borrowed. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/133700/original/image-20160810-18037-19ziuhf.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/133700/original/image-20160810-18037-19ziuhf.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/133700/original/image-20160810-18037-19ziuhf.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/133700/original/image-20160810-18037-19ziuhf.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/133700/original/image-20160810-18037-19ziuhf.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/133700/original/image-20160810-18037-19ziuhf.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/133700/original/image-20160810-18037-19ziuhf.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">How are students making borrowing decisions?</span>
<span class="attribution"><a class="source" href="http://www.shutterstock.com/pic-382946605/stock-photo-close-up-of-person-hand-over-student-loan-application-form.html?src=tar1JKkkSmhpJ75g3svWNw-1-20">Application image via www.shutterstock.com</a></span>
</figcaption>
</figure>
<p>For example, data from our study showed over half of student loan users tried to borrow as little as possible (52 percent). </p>
<p>Additionally, 38 percent considered the total amount of debt that they expected to graduate with. Thirty-three percent considered the amount that had borrowed in the past when deciding how much to borrow for the school year. </p>
<p>But about 28 percent, almost three out of 10 students, reported borrowing the maximum amount available in their package. And about 17 percent of student loan users borrowed the maximum available without also employing a strategy to minimize overall borrowing.</p>
<h2>Low financial knowledge</h2>
<p>The next question is, how well are students prepared to make these important decisions? </p>
<p>The SCFW included two <a href="http://cfw.osu.edu/posts/documents/financial-knowledge-rb03.pdf">financial knowledge</a> questions to test whether respondents could understand the concepts of interest and inflation and had basic financial numeracy. These questions assess basic concepts of financial literacy – the knowledge and skill needed to manage financial resources effectively. </p>
<p>Nearly 80 percent of the college student respondents answered the interest rate question correctly. But only 59 percent answered the inflation question correctly. Just over half of the college students (53 percent) answered both questions correctly.</p>
<p>Students who answered the interest rate question incorrectly don’t understand that interest is earned not only on money deposited in a savings account, but also on previously earned interest – a feature known as compounding – while students who answered the inflation question incorrectly don’t understand that rising inflation reduces the buying power of money. Interest and inflation both influence how much our hard-earned money can buy. </p>
<p>These results are similar to <a href="http://onlinelibrary.wiley.com/doi/10.1111/j.1745-6606.2010.01173.x/abstract">previous research</a> conducted in 2007-08 with 23-28 years old young adults. </p>
<p>In that study, the percentage of young adults answering correctly was 79 percent for the interest rate question, 54 percent for the inflation question, and 46 percent for both questions. </p>
<h2>Knowledge influences borrowing</h2>
<p>Some colleges provide either workshops or longer term courses on financial education, but the percentage of college students who receive financial education remains low. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/133699/original/image-20160810-25924-1dwy6l8.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/133699/original/image-20160810-25924-1dwy6l8.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=450&fit=crop&dpr=1 600w, https://images.theconversation.com/files/133699/original/image-20160810-25924-1dwy6l8.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=450&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/133699/original/image-20160810-25924-1dwy6l8.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=450&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/133699/original/image-20160810-25924-1dwy6l8.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=566&fit=crop&dpr=1 754w, https://images.theconversation.com/files/133699/original/image-20160810-25924-1dwy6l8.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=566&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/133699/original/image-20160810-25924-1dwy6l8.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=566&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">When students know more, they save more.</span>
<span class="attribution"><a class="source" href="https://www.flickr.com/photos/68751915@N05/6793826885/in/photolist-bmm93i-n7qPrA-jP6Pb-52bYaY-4vNT7F-ixSHMu-9cpCq1-cbDNZN-njkGgX-a2Ybz8-fX5oqK-czE4Po-9VBFby-5KGu1k-991WPV-fKczgt-953fxF-9VB6Ae-fKu9B3-5bRE4m-5veZmR-96pqZ4-62bd5T-bmm4dt-5s5fSn-54WSbQ-5J6pb2-64kFKH-9D7aFn-fzx1sz-7wat7L-czM6g-fKu9zW-dCBZ5S-7dzuyM-5Mhn4n-8AiszU-2cW7oo-dareJt-cpMPZm-4Qtgc-2giXpK-5qF2kc-5Y7qtp-65agR7-6fVgeb-q8ZPc-9VyLP4-ekKHUM-77iADV">401(K) 2012</a>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span>
</figcaption>
</figure>
<p>Only one-quarter of the SCFW respondents completed a financial education course in college. Those that did were significantly more likely to answer both financial knowledge questions correctly (58 percent vs 51 percent). This difference is too large to attribute to chance alone, and suggests that financial education increases financial knowledge.</p>
<p>Using data from the SCFW on 7,180 students at four-year colleges, we wanted to see if financial knowledge and financial education were associated with strategies used to make <a href="http://cfw.osu.edu/posys/documents/montalto-mcdaniel-national-summit-2016.pdf">borrowing decisions</a>. </p>
<p>We controlled for many factors known to affect student loan borrowing, including student age, sex, race/ethnicity and socioeconomic status. We found that with higher financial knowledge, students were more likely to borrow what they believed they needed.</p>
<p>We found they budgeted and borrowed as little as possible, when they had financial knowledge.</p>
<h2>Knowledge is power</h2>
<p>While a college degree certainly pays off in the long run, the payoff can take longer if students have loans to repay.</p>
<p>This fall as students enter or return to college, it is important that they make thoughtful decisions about financing their education. Families making decisions about paying for college may also want to have discussions about how much students understand about finances or look for opportunities to take financial education workshops. </p>
<p>As the saying goes, knowledge is power, even when it comes to finances.</p><img src="https://counter.theconversation.com/content/62153/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Three out of 10 students borrow the maximum amount available to them as loans. How well do students understand the long-term costs of borrowing?Catherine Montalto, Associate Professor of Consumer Sciences, The Ohio State UniversityAnne McDaniel, Senior Associate Director, The Ohio State UniversityLicensed as Creative Commons – attribution, no derivatives.