The Importance of Teaching Financial Literacy to Youth
The Importance of Teaching Financial Literacy to Youth
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During a recent outreach program at Penrhos College, Wealth Designers senior financial adviser Dawn Thomas asked a group of Year 9 students about the cohort with the least amount of superannuation.
To their surprise, the answer was not what they expected.
"Being kids, they threw out the most imaginative answer, which I've never heard before," Thomas tells Professional Planner. "They said babies."
While technically not incorrect, the correct answer is women.
"I explained that women retire with half the amount of superannuation that men do," Thomas says. "They were shocked and I asked them if they thought that was fair. They replied with a resounding 'No!'"
This presentation by Thomas and Horizon Group of Companies financial advisers Remo Venditti is part of a program aimed at teaching high school students about budgeting, financial goals, compounding, investing, and superannuation.
Addressing the Financial Literacy Gap
The Financial Advisers Association of Australia (FAAA) recognizes the importance of educating young people about financial literacy, according to FAAA general manager Anne Palmer.
"Teaching financial literacy to young people is incredibly important," says Palmer. "It sets them up for success in the future, not just financially but in every aspect of life. The foundation of any financial plan is understanding cash flow and budgeting."
Thomas agrees, emphasizing that even children can benefit from understanding their cash flow and budget. Starting the practice of saving for things instead of relying on debt at an early age is key.
"If they understand the benefits of long-term investing, it's really the world's their oyster," Thomas says. "Young people right now can give themselves a good start by equipping themselves with the tools to save and invest wisely."
The Talk Money Program
In response to the decline in youth financial literacy, Ecstra launched the Talk Money program in 2022, aimed at teaching children about financial literacy. Since its inception, the program has reached over 230,000 students through workshops conducted in schools across Australia.
Roadshows make up 17% of Talk Money bookings, allowing for concentrated time in regional areas across the country. While online workshops are available, the organization prefers face-to-face interactions for better student engagement.
About 24% of bookings in 2023 were repeat bookings, indicating the value that schools see in financial literacy education. External facilitators like Ecstra provide teachers with the confidence to have conversations about money in the classroom.
Ecstra is actively reviewing and improving the Talk Money program based on feedback received from schools and students, showing their commitment to evolving and meeting the needs of young learners.
Emphasizing Financial Literacy as a Life Skill
Anne Palmer and Tracey West, manager of the Ecstra Foundation, both believe that teaching financial literacy is a crucial life skill.
"It's one of the most important subjects young people will ever learn," says Palmer. "It sets them up for success not just financially, but also in all aspects of life."
West adds, "Financial literacy is a key skill that empowers individuals to make informed decisions about their finances and future."
By teaching young people about budgeting, saving, and investing, we equip them with the knowledge and tools to build a more secure and prosperous future.
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