This young girl is on course to become financially capable.
Parents should stop fretting about raising financially savvy children, and focus on ensuring they can add up and read.
After a decade of significant investment in financial education there have been no significant gains in financial capability, academic Carly Sawatzki from Deakin University in Melbourne said at Massey University’s Building Financially Capable Communities conference in Auckland last week.
But, she said: “There’s a strong correlation between 15-year’s scientific, mathematical and financial literacy.”
“The kids who are studying science and maths are doing better.”
“The STEM (science, technology, engineering and maths) agenda could be very helpful for our ambitions to raise financial capability.”
There was evidence of short-term impact on Australian children’s knowledge, and sometimes skills, from financial capability education in schools, Sawatzki said.
But, she added: “There’s no evidence they are impacting financial behaviour in the long term. Any impact actually decays over time with negligible impact after 20 months.”
Her message for educators was that for someone to be financially capable, they needed to be a capable person.
“You need to be literate. You need to be numerate. You need to be digitally savvy,” she said.
“You need to be critical and creative in the way you think. And you need some personal and social capability as well.”
That included being able to exercise self-restraint, and to think critically about their own behaviour.
Sawatzki’s surveys of educators showed significant gaps in financial education in schools.
Less than half of teachers said they were teaching children how to research and compare companies offering financial and other services.
And only around one in five taught their children how to escalate a complaint.
School money education also often focused on things like credit cards, but missed other forms of finance, like “buy now, pay later” schemes, and student debt.
“Teaching risk aversion is not teaching financial capability,” she said.
Materials were too often based on an assumption that children came from similar financial backgrounds, which was not the case, she said.
“Students need teaching behaviours and strategies that recognise social and financial injustice,” she said.
“Social and financial injustice is something that resonates with our young people, and they want to challenge the systems that have worked for previous generations, but are not working for younger people.”
She warned against allowing banks to get their branding into schools by sponsoring financial capability education.
“They (the banks) have had somewhat unfettered access to schools where they have provided kickbacks to get access to students under the guises of education.”
It had been very clever marketing to develop trust and brand loyalty, she said.
“What we have seen in Australia, though the Royal Commission into banking and financial services is that Australians have had misguided trust in the sector for a long time.
“It’s probably because of some of these approaches to financial literacy in schools, which have endeared students to particular brands.”