The financial education conundrum

Teaching kids about money in Australian schools is not the whole solution, and it's already happening anyway

Author

Lacey Filipich
March 15, 2023

If you’ve uttered the words ‘Financial literacy is not covered in Australian schools’ or a derivative in the last decade, I’m sorry to break it to you, but you are misinformed.

That is not to say it’s taught well or that it’s improving the financial literacy and/or capability of Australian youth. I’ll cover those points further in this article.

It’s also not to say that you learned about money in school.

If you’re over 25, chances are that it wasn’t comprehensively covered (unless you hit the teacher jackpot or chose economics-related studies in high school.)

…but it is now.

Personal finance and most of the bits and bobs you need to master it have been firmly in the Australian curriculum since 2011.

Specifically, I note 35 knowledge and understanding elements from Years 1 to 10 in the streams of financial mathematics, humanities and social sciences (primary school), and economics and business (high school), all of which are compulsory up to Year 8 level at least, possibly further (I’m not across what’s compulsory in each state).

I’ve listed all 35 elements at the end of this article.

Along with these 35 elements, there’s a host of cross-curriculum priorities and general capabilities that aid a person in making sound financial choices.

This is all freely available on the Australian curriculum website, hence my bluntness for those saying it’s not in there.

They clearly have not looked.

That doesn’t mean they’re not paying attention, or basing their opinion on what they see their kids doing with money.

It’s in there, but the problem is…

It hasn’t worked.

At least, not as intended.

So, assuming it’s not in the curriculum is probably fair in the face of the outcomes.

One reliable measure of financial literacy is assessed every few years by the Programme for International Student Assessment (PISA), which is run by the Organisation for Economic Cooperation and Development (OECD).

They test a representative sample of 15-year-olds from several different countries including Australia.

In 2012 - just one year after the introduction of explicit personal finance in the curriculum, so well before it can have had any significant impact - Australia scored 526 against an international average of 497.

In 2015, the average slipped 23 points to 476 and we slipped 22 points to 504.

In 2018 - the last published test - the average came back up nearly all the way to its 2012 high (to 496) and we came up too, but not commensurately - our score was 511.

The drop from 526 to 511 represents students falling six months further behind in their financial literacy, seven years after the curriculum changes.

This is a very inconvenient fact for the financial education community, so it’s been the subject of much scrutiny.

If I dare mention it in public, I am soundly reminded why the Australian experience is considered an exception to the rule that personal finance teaching in school improves financial literacy by academics and practitioners alike.

They may be right …or maybe not?

There are a lot of potential reasons for this disconnect between intent and outcome in Australia as outlined in this 2022 paper by Laura de Zwaan and Tracey West, such as:

  • It’s not taught as a standalone subject,

  • Teaching focuses on calculations rather than including broader context, and

  • Teachers aren’t confident in the topic.

There have been international studies showing that the improvement of other programs is real.

In the interest of balance, I must also mention at least one study exists that shows financial literacy education makes bugger-all impact on financial capability.

Here are the prime examples of each of these:

What’s that adaptation of Newton’s Law again? For every economist you can find an equal and opposite economist? Perhaps it’s the same in academia…

Pragmatically, it doesn’t matter if there are a few dissenters and the occasional inconvenient exception to the rule.

We know anecdotally that a little knowledge can go a long way in a person’s finances.

We also know levels of financial literacy and capability are a recipe for societal and individual disaster as people become more mired in debt, so…

We need to try anyway.

It’s worth taking the time to make any personal finance education more robust and more effective.

That’s why is brilliant to see programs like Ecstra Foundation’s Talk Money reaching 100,000 students in their first year - an incredible achievement.

External programs such as Talk Money take the pressure off teachers to add ‘personal finance expert’ to their toolbox of skills. I will be very interested to see how their students’ financial capability changes as a result of that intervention (hope you’re collecting that data, team!)

But now for another inconvenient fact:

We can’t keep shoving stuff into the curriculum.

Like all typical humans, we tend to add without taking away.

With respect to the curriculum, we’ve been adding without eliminating for decades.

This is not sustainable.

We see the result of the increasing burden on teachers in droves of them leaving the profession and university enrolments for the degree dropping.

It’s had tangible impact on the quality of learning in key areas like numeracy, which has been progressively declining in Australia.

Personally, if we can’t do everything in 25-odd teaching hours a week (and we definitely can’t), I’d prefer to have teachers focused on literacy, numeracy and the like than life skills such as personal finance.

Which means it’s time for a tough conversation about the role parents play in their children’s financial literacy and capability.

To parents keen to ensure their kids don’t miss these essential skills, I say:

Full or majority outsourcing is not effective.

Not our proudest moment, though thankfully that’s behind us now.

Even if your child could learn everything they needed about personal finance in school, what happens if they don’t get the chance to apply it at home?

You end with the same situation we get with health education: teaching kids to eat healthy foods is an exercise in futility if they come home to fast food every evening.

Perhaps some kids come home and manage to persuade their folks to provide some healthier food options, but it’s not enough to shift the dial on the childhood obesity rate, which grows ever worse.

Parents must be active and engaged participants in their child’s financial education, providing opportunities to apply the skills their kids are learning and reflect on mistakes and progress.

Further…

I believe the buck stops at home, not at school.

The reason it’s hard to teach personal finance in maths class is that financial decisions are only partly numerical, and the numbers are the lesser part of the puzzle.

By far the bigger issues are things like:

  • Values and ethics. How much do you donate? Who do you donate to? What investment do you consider aligned with your personal beliefs?

  • Priorities. What’s important to you? Do you value home ownership? How do you feel about debt? How do you want to spend your time?

  • Circumstances. What postcode do you live in? What kind of life were you born into? How much money can you earn?

These factors have an enormous bearing on a person’s financial outcomes. At home with family is the best place to help a child explore them.

Which means we, as parents, are the ones with the most responsibility for teaching our kids about money.

Not schools, not governments, not the local youth club - us.

For those parents thinking: ‘But I have no idea how to teach my child this stuff!’, I have great news for you…

Parent financial literacy is irrelevant.

Parenting comes with no manual so you have to figure it out as you go along.

I hadn’t thought through how to teach my child to wipe its butt, but we managed.

It’s the same with money.

You deal with the stuff every day as an adult. If you haven’t worked out how to explain it to your kids yet, please know that you will.

There are thousands of resources out there to help you if you get stuck - podcasts, books, blogs, MoneySmart - they’re all there on the web, eagerly awaiting you. A list of my free blogs, articles and podcast appearances on this are listed below.

If there’s an area you’re not confident in, that’s cool - the best way to learn is to teach, and you only have to stay one lesson ahead of your offspring.

(And bluntly, if you want to fully ‘adult’, you probably do need to learn that skill anyway.)

But if you’re lamenting your child’s financial competence or decision-making, don’t point the finger at the curriculum.

Take a look in the mirror instead.

(Ouch, right? Sorry-not-sorry).

Reading and resources to help parents

Australian curriculum elements relating to personal finance (head to Scootle for teacher resources)

  • Year 1 - Financial maths - Recognise, describe and order Australian coins according to their value

  • Year 2 - Financial maths - Count and order small collections of Australian coins and notes according to their value

  • Year 3 - Financial maths - Represent money values in multiple ways and count the change required for simple transactions to the nearest five cents

  • Year 4 - Financial maths - Solve problems involving purchases and the calculation of change to the nearest five cents with and without digital technologies

  • Year 5 - Financial maths - Create simple financial plans

  • Year 5 - Humanities and Social Sciences (HaSS) - Influences on consumer choices and methods that can be used to help make informed personal consumer and financial choices

  • Year 5 - Humanities and Social Sciences (HaSS) - The difference between needs and wants and why choices need to be made about how limited resources are used

  • Year 5 - Humanities and Social Sciences (HaSS) - Types of resources (natural, human, capital) and the ways societies use them to satisfy the needs and wants of present and future generations

  • Year 6 - Financial maths - Investigate and calculate percentage discounts of 10%, 25% and 50% on sale items, with and without digital technologies

  • Year 6 - Humanities and Social Sciences (HaSS) - How the concept of opportunity cost involves choices about the alternative use of resources and the need to consider trade-offs

  • Year 6 - Humanities and Social Sciences (HaSS) - The effect that consumer and financial decisions can have on the individual, the broader community and the environment

  • Year 6 - Humanities and Social Sciences (HaSS) - The reasons businesses exist and the different ways they provide goods and services

  • Year 7 - Economics and Business - Characteristics of entrepreneurs and successful businesses

  • Year 7 - Economics and Business - The ways consumers and producers interact and respond to each other in the market

  • Year 7 - Economics and Business - Why and how individuals and businesses plan to achieve short-term and long-term personal, organisational and financial objectives

  • Year 7 - Economics and Business - Why individuals work, types of work and how people derive an income

  • Year 7 - Financial maths - Investigate and calculate 'best buys', with and without digital technologies

  • Year 8 - Economics and Business - Influences on the ways people work and factors that might affect work in the future

  • Year 8 - Economics and Business - The rights and responsibilities of consumers and businesses in Australia in terms of financial and economic decision-making

  • Year 8 - Economics and Business - The traditional markets of Aboriginal and Torres Strait Islander communities and their participation in contemporary markets

  • Year 8 - Economics and Business - The ways markets in Australia operate to enable the distribution of resources, and why they may be influenced by government

  • Year 8 - Economics and Business - Types of businesses and the ways that businesses respond to opportunities in Australia

  • Year 8 - Financial maths - Solve problems involving profit and loss, with and without digital technologies

  • Year 9 - Economics and Business - Australia as a trading nation and its place within the rising economies of Asia and broader global economy

  • Year 9 - Economics and Business - The changing roles and responsibilities of participants in the Australian or global workplace

  • Year 9 - Economics and Business - The nature of innovation and how and why businesses seek to create and maintain a competitive advantage in the market, including the global market

  • Year 9 - Economics and Business - Why and how participants in the global economy are dependent on each other

  • Year 9 - Economics and Business - Why and how people manage financial risks and rewards in the current Australian and global financial landscape

  • Year 9 - Financial maths - Solve problems involving simple interest

  • Year 10 - Economics and Business - Factors that influence major consumer and financial decisions and the short- and long-term consequences of these decisions

  • Year 10 - Economics and Business - Indicators of economic performance and how Australia’s economy is performing

  • Year 10 - Economics and Business - The links between economic performance and living standards, and how and why variations exist within and between economies

  • Year 10 - Economics and Business - The ways businesses respond to changing economic conditions and improve productivity through organisational management and workforce management

  • Year 10 - Economics and Business - The ways that governments manage economic performance to improve living standards

  • Year 10 - Financial maths - Connect the compound interest formula to repeated applications of simple interest using appropriate digital technologies

About Money School

If you’re new here, welcome! Delighted to have you 😁

This is the blog for Money School, an Australian financial education company.

The main site is at https://www.moneyschool.org.au, but I keep our articles over here on beehiiv.

Everything on the main site and this blog is for educational purposes only. I’m not a financial adviser, nor do I play one on Netflix. I aim to help you learn about money so you can ‘choose your own adventure’.

Money School was co-founded in 2010 by me (Lacey Filipich) and my mother, Fran White. Money School offers workshops, online courses and have an international award-winning book, published with Penguin Life in 2020.

I’m also a regular media commentator on all things personal finance. If you’ve got 16 minutes to spare, you might like to check out my TEDx talk (over 1m views!) on financial independence and mini-retirements.

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