Peter Kell explains why a combined effort across all sectors can help Australians make better informed monetary decisions.
In August 2014, Australia’s new National Financial Literacy Strategy 2014-17 was launched by the Parliamentary Secretary to the Treasurer. The new strategy, led by the Australian Securities and Investments Commission (ASIC), sets out a national framework to improve the financial literacy of all Australians and provides a roadmap for all those working in this area.
It reflects the outcome of 12 months of public consultation involving more than 200 stakeholders, as well as the latest research and international best practice guidelines.
The scope of this engagement shows the breadth of interest in financial literacy across many sectors. This is because, irrespective of your life stage or circumstances, financial issues are intrinsic to every aspect of our lives.
As a result, “financial literacy” — which is the ability to make sound financial decisions — is relevant in many contexts and scenarios. It is considered by many, including the Organisation for Economic Co-operation and Development (OECD), to be a core life skill. This is certainly true in Australia, with almost every Australian adult owning one or more financial products.
According to 2013 Roy Morgan Research, more than 90 per cent of Australians have a deposit account, 70 per cent have superannuation or an annuity and 75 per cent have a major credit card. Add to this the growth of household debt (average new loans from banks to mortgagees has doubled from less than $150,000 in 2000 to more than $300,000 in 2013), and the fact Australians are living longer and spending longer in retirement, the case for increased financial literacy is even stronger.
Over the past decade, particularly since the global financial crisis, financial literacy has gained prominence on the agendas of many world economies. As of August 2014, 55 countries are in various stages of developing, implementing or revising a national financial literacy strategy that accords with the OECD/International Network on Financial Education (INFE) High-level Principles on National Strategies for Financial Education, compared with 26 countries in 2011 and 45 in 2013.
The Australian National Financial Literacy Strategy 2014-17 is built around:
- Educating the next generation, particularly around the formal education system, including schools.
- Increasing the use of free, impartial information, tools and resources, such as ASIC’s MoneySmart website (moneysmart.gov.au).
- Providing guidance and support.
- Strengthening partnerships.
- Improving research, measurement and evaluation.
Financial literacy education, particularly through schools, is a focus of the strategy and is consistent with ASIC’s priority to help consumers and investors make confident and informed financial choices — whether they are choosing a mobile phone, taking out a home loan or investing in the market.
In line with the OECD’s recommendations that financial literacy education should be introduced as soon as possible, preferably in the school curriculum, ASIC and education authorities have worked to develop ASIC’s MoneySmart Teaching — a program which integrates consumer and financial literacy education into Australian curriculum learning. It also builds teacher capacity and confidence to deliver this education to young people. Trialled in over 90 Australian schools in 2012-13, the program provides primary and secondary teachers with development and resources aligned to the Australian curriculum and the National Consumer and Financial Literacy Framework.
Rather than teach consumer and financial literacy as a separate subject, ASIC’s MoneySmart Teaching provides teachers with the resources to integrate the financial principles of planning, saving, spending, donating and investing into maths, science and English curriculum areas from foundation to Year 10. ASIC’s MoneySmart Teaching has made significant progress, with more than 12,000 teachers completing professional development and more than 2,000 schools engaged in our program.
We must build on the significant work achieved to date by programs like ASIC’s MoneySmart and draw on the resources, expertise, and commitment of stakeholders across the government, business, community and education sectors. To that end, we encourage organisations to link to ASIC’s MoneySmart website at moneysmart.gov.au.
Through a combined effort across sectors, we will help not only young people but all Australians, make confident and informed financial decisions and build more secure futures.
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