Are we as smart about our money in Australia as we like to think?
At one level, it would appear so. The Global Financial Literacy Survey, run by Standard & Poor’s Rating Services, ranked us top for the region when it comes to financial literacy.
The study found that:
- About two-thirds of adults in Australia (64 per cent) understand key financial concepts – compared to an average of one third of adults across the the globe.
- The figure puts us ahead of all other Asia-Pacific countries and ninth in the world.
- Of all English-speaking countries, only Canada (68 per cent) and the UK (67 per cent) scored higher.
- In New Zealand, financial literacy rates are 61 per cent (11th in the world) and in the US it standard at 57 per cent (14th).
Perhaps understandably the news was held up as an example of the strength of the Australian education system, with Edmund Tang pinpointing this in a piece for the Australian Trade and Investment Commission’s website.
Worrying trend among young Australians
Yet a separate study suggests that no-one should get carried away by this news. While the above data is cause for positivity, it’s useful to look at the next generation of adults to see if this trend will continue.
It’s in doing this that we see some cause for concern. According to a new OECD Programme for International Student Assessment report, about a fifth of 15-year-olds do not have ‘basic financial literacy’.
This report deals with a different definition of financial literacy to Standard & Poor’s and shows that knowledge of the basics among this age category is on the decline. Crucially, aspects that students struggle with include reading pay slips and being able to spot financial scams.
Is Australia’ education investment working?
The above trend might be seen as especially alarming given the investment in this field. In the decade since the global financial crisis, the Australian government has put more than $10 million into initiatives such as the ‘Helping our Children Understand Finance’ policy in a bid to equip students to be able to manage their money in a tough climate.
Writing for The Conversation, Carly Sawatzki of Monash University feels it’s time to question the success of this and believes lessons could be shaped in a way to make the knowledge more relevant to students.
She explained: “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 think about using these services themselves.
“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.”
Indeed, as this group goes on to be the next adult work force in Australia, understanding everything from trading software to mortgage terminology and the language of the boardroom is important for the people themselves and the country as a whole.
A timely warning
Sawatzki notes that this might mean more support for those in education. If we’re to avoid losing our standing as one of the world’s most financially literate nations, we might do well to heed her timely warning and do what’s necessary to prepare the workers of tomorrow for the future that lies ahead.