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As kids around the country don their backpacks and head back to school this week, they are shielded from the world's economic worries within poster-clad classroom walls. Meanwhile, we adults face a gauntlet of bills and mortgages, high housing prices and financial meltdown forecasts. While younger generations may be blissfully unaware of these challenges now, should we not be preparing them for the future? As per the Australian Curriculum Assessment and Reporting Authority (ACARA) website, the national curriculum is designed to develop "active and informed young people who are ready to take their place in society." If that's the case, shouldn't personal finance - including investing and the stock market - be an integral part of the Australian curriculum? Would we see more financially literate future generations, better equipped to cope with the inevitable economic challenges we must all navigate throughout our lives - or would this be a poor investment on the taxpayers behalf?

What's here already?
Schools in Australia do touch on finance and economics already. There's the MoneySmart Teaching program (also known as HOKUF), a government initiative aimed at improving financial literacy in Australian students. Teachers are provided the materials and training necessary to integrate the concepts of consumer and financial literacy into the context of existing subjects. So in a Year 8 unit for example, students are introduced to the concepts of profit and loss, the importance of planning for financial success and markets - including the stock market. In year 10, students learn about compound interest and its effect when applied to loans, superannuation and investments. Additionally, you've probably heard of the annual ASX Schools Sharemarket Game where thousands of participating students receive a virtual $50,000 they can invest over a 10 week competition. Are these initiatives enough and are they working?

The MoneySmart program has been deemed successful; an independent evaluation of the program found it increased teacher and parent awareness of the importance of financial education in schools. Yet whether or not the program has long-term effects on the students themselves i.e. their financial wellbeing, was not studied (that would require a larger, more in-depth study). While better than nothing, the initiative appears to be more about raising awareness of financial literacy rather than instilling a good, solid grounding in it.

As for playing stock market games, the founder of Intelligent Investor Share Advisor John Addis makes some good points. The rapid time frame and modified rules turn investing into gambling. Rather than teachings in compounding dividends or selecting reliable companies at smart prices, students are given a huge wad of virtual cash, can buy and sell up to 20 times a day and have only 10 measly weeks to compete. This ultimately teaches students to take huge risks, promotes investing as simply fast buying and selling and that what you need to be a winner on the stock market is a quick jackpot. As any smart investor will testify, this goes against common sense.

Financial literacy is a journey, not something that can be adequately grasped in a semester, let alone in 10 weeks. Perhaps what students need is a subject dedicated to finance and investing taught year-in-year-out, advancing in difficulty with each grade.

The Challenges
One might wonder why we aren't teaching personal finance and investing to a greater extent already, but there are various challenges to adopting such a broad and intricate topic into classrooms.

Lack of Expertise - It's imperative that teachers would have to know what they're talking about. In the USA, high schools in 17 states now include a personal finance class. But even though these teachers receive training, finding qualified educators to handle this subject remains one of their greatest challenges. Those that are experts on finance and investing i.e. people that have found success on the stock market, might not find the idea of teaching in schools appealing. However, we don't exactly need the likes of Warren Buffet to grace our classrooms. As mentioned, financial literacy is a journey - a life-long journey. Seeds of smart money management can be planted early so that when students do graduate, they are more engaged and better prepared for this journey.

Too much too soon - Some argue this is too heavy a topic for younger generations. Investing, for example, demands closely assessing and valuing companies, along with skills of self-control and patience. This requires a level of ability and maturity. Is this too much to expect from the average hormonal and distracted teenager? While it's easy to dismiss this type of topic as too 'unrelatable' or even 'boring' for young people, the money-making landscape is changing and youths are infatuated by a myriad of modern-day opportunities i.e. social media influencing, affiliate marketing etc. This is a fire that could be stoked. In Rhode Island, USA, students even campaigned to have a financial literacy course introduced into their education. Due to their efforts, 200 teachers across the state were trained and students began learning about savings, debt management and investments. The high schoolers said this helped them search for scholarships and think more critically about college loans and debt.

Crowded Curriculum - Some argue the Australian curriculum is already too busy. Numeracy, languages, arts and sciences to even sex education. Perhaps there's no space to teach a skill that can be learned later on or in other forums.

Yet financial challenges evolve and do not discriminate - they crop up in every generation, every socioeconomic group and during times of both boom and bust. Research from 2018 found 32% of Australians feel financial problems, the rising cost of living, unemployment, housing affordability etc are the most important problems facing Australia. What if we were all better equipped to navigate these challenges? Currently, around 1 in 6 Australians are struggling with debt, while 50% of Australians don't have a financial plan.

In spite of our woes, we all become investors in some way due to our national superannuation scheme. However, multiple surveys have found the millennial generation are unengaged with their super and in total 40% of Australians don't even know how much they have saved in super.

A final recommendation that came from the MoneySmart Teaching assessment was that consumer and financial literacy education was worth further investment and should be a national priority. If that's the case, maybe financial literacy is a subject we should be making room for. A better grounding in finances and investing could turn some of these figures around, benefiting future Australians at the individual, community and even national level.

Show Me The Money
At the end of the day, it really boils down to whether or not an investment in student education of this kind is in the government's interests, both in the short term (what the public thinks) and the long term (cost versus benefit). This means we need to be having more discussions among ourselves and in the media on financial literacy education. As for longstanding benefits - since the idea of teaching financial literacy in schools is relatively new, there is not a lot of long-term research or case studies to go by. Hence, we must look at the current state of financial affairs in Australia. Between superannuation concerns, a stagnating national wage, growing debt issues, an aging population and more, it seems we have a collective need to be better equipped to manage and grow our money.


First Published: 30 January 2019 - Copyright © Electronic Information Solutions Pty Ltd 1990 - . All Rights Reserved.

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