teaching consumer and financial and economic literacy in schools

Financial literacy programs taught in schools are exposed as value-ridden, flawed & totally inadequate

Most of what is taught and learned in financial literacy programs in schools reflects middle class values and a conservative ideology about the role of government and individuals in achieving economic prosperity. The COVID-19 pandemic is now disrupting this thinking.

Governments tend to take a conventional view of financial literacy, seeing it as a toolkit of knowledge, skills and behaviours that leads to “effective financial decisions” and “financial wellbeing”.  It is an approach that emphasises the need for a financially responsible citizenry and invests heavily in policy and education initiatives to achieve just that.

This view (and the financial literacy initiatives that stem from it) assumes that by knowing how financial products and services work, you can access “financial solutions” that will help you to be “in control” of your money. Related to this is the assumption that financial difficulties can be avoided or overcome by understanding the difference between needs and wants and being responsible in how you bank, budget and save. These are the basics.

Schools and teachers have long been diligently preparing our young people for economic and financial participation based on this conventional approach. And the rest of us, some armed with financial self-help books, have been organising our financial affairs in much the same way.

But COVID-19 is challenging the way we think about personal and public financial practices. The often-anguished face of Australian Treasurer, Josh Frydenberg, shows how this is playing out for our current Federal Government. And I believe COVID-19 is highlighting that our approach to financial literacy in schools, while serving governments and the finance industry, does not go far enough.

Broken promises

As we adjust to our new reality in a post COVID-19 world, we are coming to realise that the old view of financial literacy has done little to prepare us for the experience of financial loss and hardship.

It’s something those familiar with socioeconomic disadvantage have always known: the conventional way of thinking about money is not particularly helpful.

Take savings. Most Australians have some savings, but nowhere near enough. The Grattan Institute reports that even the highest fifth of income earners have less than four weeks’ income in the bank. The Barefoot Investor only recommends emergency savings equivalent to three months of living expenses. The story about savings is unravelling.

In recent weeks, many people with travel insurance and income protection insurance have been shocked to discover that their policies do not include cover against losses associated with a pandemic.

The promise that financial practices like saving and insuring hold the key to personal financial security and wellbeing has been broken.

A new game

The COVID-19 lockdown reminded us what is a need, what is a want, and what is a privilege. The financial playing field is being levelled as we change the way we talk about money as a limited resource and the Reserve Bank prints money to fund a compassionate response.

Federal and state governments have announced stimulus packages totalling in excess of $500bn – an extraordinary figure.

The banks are allowing customers to hit pause on home loan repayments. Landlords and tenants are being encouraged to negotiate in ways that give more power than ever to the tenants.

Many people are suddenly eligible to access significant sums from their savings in superannuation.

It’s a lot to take in.

And most of us are now having to make important decisions about complex options on the run and under duress.

But with lines stretching outside Centrelink offices, difficulties accessing the MyGov website and hours spent waiting on-hold to banks and other financial service providers, many will lack the energy, know-how and confidence to advocate for their rights and entitlements.

Why? Because very few have had the opportunity to practice these sorts of “What if?” scenarios at school or in other formal education settings.

Those who are literate, numerate, digitally savvy and able to think critically will fare better in their quest for assistance. That’s not to say it will be easy.

What comes next?

Right now, Australia is learning the importance of a robust science and mathematics education. We are also learning about the purpose and capacity of the public services our taxes fund.

This learning is uncomfortable, confronting, painful.

At the same time, we are being given a taste of what’s possible.

Within communities, people are caring for those who are vulnerable by sharing money and food. Rough sleepers are being housed and childcare is free. Not because we’re moving towards socialism, but because sharing resources in this way is essential to our future. In fact, it always has been.

Beyond COVID-19, I am hopeful that schools and teachers might study this crisis and search for its legacy.

Perhaps the national conscience will be transformed, and we will question government ideology that expects us to be financially literate and responsible, but runs important public services like healthcare and education on empty.

Beyond this unimaginable economic and financial crisis, we will need a more progressive vision of a financially capable citizenry.

Dr Carly Sawatzki is a lecturer in the School of Education at Deakin University. She researches the teaching of humanities, mathematics and numeracy in consumer, economic, and financial contexts (i.e., financial capability / financial literacy / money and financial mathematics).

Don’t trust banks to teach financial literacy to children. Here are some teacher insights

For generations, schools, teachers and parents around Australia have relied on the finance industry for money-related expertise and education for our children. We now know that our trust was misguided. Australian school children may well leave school with a preferred bank but many are unprepared for the complex financial problems and decisions they will face as young adults.

I led a research team that looked into the teaching of consumer, economic and financial literacy in government, Catholic and independent secondary schools in Victoria. Our findings could be useful to policy makers, schools, teachers and other interested stakeholders dealing with this issue.

The inconvenient truths

Misguided trust

In Australia we regularly invite representatives of banks and financial institutions into our schools to teach our children about managing their finances. Many schools have been using the school banking programs they offer.

However these banks and other financial institutions have been using this access to students to employ subversive sales tactics, blatantly market brand awareness and coach brand loyalty.

Left without essential knowledge

We also know around one in five Australian fifteen year-olds are left without the essential knowledge and skills to confront relatively simple “real world” financial tasks such as reading pay slips and invoices and detecting scams. In PISA testing of the financial literacy of fifteen year olds, Australia’s performance “declined significantly” between 2012 and 2015.

Unknown professional learning needs and impact

Since the global financial crisis, the Australian government and the finance industry have invested significantly in initiatives intended to help young people understand finance. However there remains limited independent, peer-reviewed research exploring how Australian schools and teachers make sense of and approach their work as consumer, economic and financial literacy educators. This means that the impact of these various initiatives on school programs, teacher practice and student learning is largely unknown. By extension, so too are teachers’ professional learning needs and interests in this field.

Our research study

The Monash University and the Victorian Commercial Teachers Association (VCTA) research study that I led explored secondary commerce teachers’ opportunities and readiness to teach consumer, economic and financial literacy.

The teacher survey we conducted as part of that study revealed some startling statistics.

  • Less than one-third of those surveyed reported that their school offers compulsory subjects or units that are dedicated to teaching and learning about consumer, economic and financial literacy.
  • The top five topics taught about finance to Year 7 to 10 students are actually found in the Mathematics curriculum. These include calculating the cheapest price per unit of measurement; reading and interpreting financial information presented in tables, charts and graphs; calculating simple interest; calculating compound interest, and making sense of a payslip, including calculating tax and superannuation payments. In mathematics, algebra prepares students to understand and manage loan, superannuation and investment products. Here, students learn that when one variable changes (i.e., interest rates rise), there is an inevitable impact on one’s financial position (i.e., loan repayments become higher, but so too do returns on savings).
  • While just over half of those surveyed (54%) reported teaching students to take action in response to a too-good-to-be-true or suspicious offer that might be a scam, the number that reported teaching students to identify an email scam was much lower (31%).
  • Related to the above, only one in five of those surveyed (18%) reported teaching students how to decide whether to provide bank and/or credit card details when paying for products and services online (including apps).

Useful teacher insights

We used the survey results to identify a number of teacher insights that interested stakeholders might use to support the work of schools and teachers as consumer, economic and financial literacy educators.

  1. Provide practical programs. Students need practice solving “real life” financial problems and making financial decisions. The classroom can be a safe and supportive place to do this.
  2. Convince students that mathematics is really useful in helping with finances. Connect the usefulness of mathematics to making every day decisions about finances, especially those that schools leavers will need to make with their finances.
  3. Instil scepticism. Australians lost almost half a billion dollars to scams last year. Children should be taught to be wary of too-good-to-be-true or suspicious offers, invitations and messages received online.
  4. Encourage critical thinking. Teach students the importance of asking themselves and others good questions: How can I tell if I am being misled? Have I considered all available facts and evidence? How will this decision impact me in the short- and long-term? How will this decision impact others (family members and the natural environment)? Where can I get quality advice that I can trust?
  5. Teach students to transact safely online. Technological innovations mean we can transact conveniently with a click or a tap. Digital payment apps like Afterpay, while appealing, are poorly regulated. Students need to be taught how to decide whether to provide bank and/or credit card details when paying for products and services online (including apps).

Knowing students is central to teaching them well. I believe it is particularly important for schools and teachers to have local conversations about the financial realities students have to deal with today, especially those facing soon-to-be school leavers and the sorts of learning experiences that might prepare them to be financially capable.

With the right professional learning and support, schools and teachers can identify the financial literacy learning needs that exist within their local communities and design savvy programs to meet these needs.

For those who want more

Readers can sit the OECD PISA financial literacy test items here.

The report in full MONASH EDUCATION Exploring secondary commerce teachers’ opportunities and readiness to teach consumer, economic and financial literacy

Carly Sawatzki is a lecturer in Maths Education in the Faculty of Arts and Education at Deakin University. Carly’s ongoing educational design research program has to date been situated within the Encouraging Persistence Maintaining Challenge (EPMC) project (an Australian Research Council Discovery Project, DP110101027). As the lead researcher exploring the topic of ‘Money and financial mathematics’ she has worked collaboratively with upper primary school teachers and students in Australia and New Zealand to create and research open-ended financial literacy tasks. Carly’s other research interests include curriculum innovation; numeracy and mathematics task design; mathematical problem-solving in real world contexts; and pedagogical coaching to enhance teaching and learning. Carly is on Twitter @CarlySawatzki