Financial literacy standards falling

“Education costs money.  But then so does ignorance.” Sir Claus Moser

Forget the three R’s, Australian students are falling behind in basic financial literacy, according to the OECD Programme for International Student Assessment (PISA) Financial Literacy Assessments Report.

The latest PISA assessment, undertaken in 2015, measured the financial literacy of 15 year old students across a range of OECD countries.  It particularly focussed on the ability of students to use their financial knowledge and skills to meet real-life opportunities and challenges.

For Australia, the results were not good.  Approximately twenty percent of 15 year old Australians don’t have basic financial literacy, and this statistic is only getting worse.  Between the first assessment in 2012 and the second in 2015, Australian students’ performance declined significantly.  While the nation remains just above the OECD average, there is a significant gap between Australian students’ results and those of students in better performing countries.

PISA defines financial literacy as: Financial literacy is knowledge and understanding of financial concepts and risks, 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.

How is Australia addressing the issue?

The National Financial Literacy Strategy, adopted in 2011 and revised in 2014, is coordinated by the Australian Securities and Investments Commission (ASIC).  The strategy provides a framework to develop and deliver initiatives to improve financial literacy for all Australians.

One of the key strategic priorities for the period 2014-17 was to ‘Educate the next generation, particularly through the formal education system’. This priority resulted in ASIC’s MoneySmart Teaching program.  By working with state and territory education departments, teachers, schools and the university sector, this program introduces financial literacy to young Australians from a very early age through the national curriculum.

States and territories began a phased approach to implementing financial literacy into the Australian Curriculum in 2012, predominantly in the learning areas of Mathematics, Humanities and Social Sciences and the General Capability of numeracy. In December 2014, ASIC commissioned an independent evaluation of the program covering the period from 2013 -2017 with a final report released in late 2017.

The early evidence is in

While there is little Australian research exploring how teachers make sense of this subject area, Associate Professor Catherine Attard of Western Sydney University published a report in 2016 on financial literacy and engagement.  In the report, Professor Attard reveals that while the Australian Curriculum: Mathematics (ACARA, 2012) includes aspects of financial literacy as part of its content descriptors, the topic lacks depth and the context of real-life scenarios. Indeed, she discovered one of the most common complaints from students regarding mathematics education is its lack of relevance to students’ lives outside the school.

With the latest Department of Social Services Data suggesting that 5.1 million Australian’s receive income support payments in conjunction with an increasingly ageing population, it is evidently essential that young Australians learn how to manage their money in practically and effectively.