Why teaching financial literacy in schools makes sense

Everyone fussed over the latest PISA results, particularly the underachievement in maths. Personally, I think maths is overrated, and I was very pleased when I abandoned it at the end of Year 11.

The school curriculum should teach students to be financially literate. Picture: Shutterstock

The school curriculum should teach students to be financially literate. Picture: Shutterstock

What is not overrated, however, is financial literacy. You don't need to memorise the compound interest formula to learn that interest rapidly accumulates, and unless you want to be poor forever you should pay off interest immediately (or better yet, not ever use consumer debt to buy things).

Given that financial literacy is a vaccine against poverty, and that being able to calculate the algebraic median of the Z-axis hypotenuse has no day-to-day applications at all, one would think that financial literacy featured somewhere in the school curriculum.

Which it does - sort of.

The Australian Curriculum, within the humanities and social sciences section, has a sub-section on economics and business. For the most part, it focuses on the big picture - the Australian economy, what affects the economy and the link between the economy and standard of living. Where the curriculum covers a more individual level it's predominantly about business - writing a business pitch, creating a balance sheet and writing an advertisement.

The curriculum does include some useful financial literacy points, such as "the difference between good debt and bad debt" or "identifying ... factors that influence major consumer decisions".

However, that financial literacy is merely a tangent to "proper" topics such as the economy and running a business is evident in the work samples. Of the 24 work samples provided with the curriculum, only two relate to financial literacy (both about rights under the Australian Consumer Law).

Altogether, the curriculum teaches students important stuff that does not enable those students to improve their lives at all. Let's compare and contrast:

Is it useful to know how the economy works? Yes. Do students control the economy or its effect on their lives? No. Can any student improve their life by knowing about the economy? No.

Is it useful to be financially literate? Yes. Do students control their personal finances? Yes. Can students improve their life by applying financial literacy to their personal finances? Yes.

So why is it then that the curriculum is almost entirely focused on the big national picture, when it's the little personal picture that actually empowers students and could improve their lives? There's no point learning about international economic headwinds if you aren't aware that the sole purpose of consumer debt is for banks to profit by having you spend money you don't have on things you don't need to impress people you don't like.

And then, into this financial literacy void steps Commonwealth Bank. Under the guise of teaching financial literacy is the Dollarmites program, a historical hangover that is little more than a marketing and data collection exercise on vulnerable young children. Even the Commonwealth Bank's Start Smart program, which is a good financial literacy program, is a brand awareness exercise that would be totally unnecessary if the curriculum itself sufficiently covered financial literacy. (Not to mention that allowing an allegedly criminal organisation to teach in schools shows questionable judgment.)

There is even an independent, government funded program ready to go - ASIC's MoneySmart program, which includes guides for teachers, classroom resources, the whole bit.

All that would be required for students to become financially literate and empowered is reversing the focus in the curriculum so that financial literacy, rather than the economy, was the main topic.

Altogether the current state of the curriculum is not encouraging. There is an opportunity to permanently improve the lives of students by upskilling their financial literacy. Instead, we'd rather have a panic attack because PISA said Finland is better at calculus. Somehow I think we're missing the point of education.

  • Christopher Budd is an ordinary person living in Canberra. This includes full-time work, part-time study (law), going to church and parenting his three children.