This country is in the midst of a cost-of-living crisis. Interest rates are rising, everyday household items are becoming more expensive and families are worried about making ends meet.
Whilst times are certainly tough for Australians, there is an underlying contributing factor that we are simply not speaking about: Australia’s declining financial literacy standards.
Financial literacy is the possession of the skills and knowledge necessary to make smart and informed decisions about your personal finances. It is one of the most basic and important skill sets that every person and Australian should and must have.
Whether they’re trying to save for their first house, paying for their child’s education or making their weekly shopping list, every day every Australian makes personal financial decisions that impact their bottom line.
Alarmingly, though, 86 per cent of Australians do not know or understand their monthly expenses.
Australia also ranks fifth in the world out of all the OECD countries for the highest percentage of household debt, and now we have a combined total of over $17 billion of personal credit card debt in this country.
Simply put, Australians’ relationship with their own money needs to change.
This is not a mindset or cycle we want our children and grandchildren to fall into.
That’s why I’m calling upon the federal government to introduce compulsory financial literacy as part of the national curriculum.
If we look at where our children receive their financial literacy from, most children get their personal financial understanding from either their parents or maths based subjects in school.
But with only 50 per cent of Australian adults considered to be financially literate, and a significant decrease in enrolments in maths- and economics-based subjects in senior years, it is clear that we have a problem.
If we delve into this even further, the fact that maths is not compulsory in all Australian states and territories in senior years and that boys usually outnumber girls by two to one in maths based subjects means that we have created a very real situation in which some children, especially young girls, grow up never having an informed discussion about their personal finances.
No wonder there is a direct correlation between increased rates of homelessness amongst women and a lack of financial literacy.
Financial literacy in schools would help reduce homelessness amongst women as it would give young girls the skills to be more actively engaged in managing their own finances later in life.
Financial literacy in schools would also improve mental health and the wellbeing of Australians. A recent study by ASIC and Beyond Blue highlights that people who are experiencing financial challenges are twice as likely to have experienced mental health challenges.
Financial stress also leads to relationship and marriage breakdowns, increased depression and anxiety, and an overall decrease in the quality of their life.
So, not only does this motion help with creating better financial habits for the next generation; it also helps address the social and emotional wellbeing of Australians.
Financial literacy in schools would make not only our households grow stronger and more adaptable but so, too, our nation.
It is our responsibility to ensure that the next generation is equipped with the skills that they need to be confident in making smart personal financial decisions so that they can get ahead, especially as we become a cashless society, where knowing what a dollar is and understanding the value of that dollar will become increasingly difficult for future generations to understand.
What is a budget? How do interest rates work? What are the implications of credit scores and superannuation? How to save, how to invest and how to live within your means should be taught in schools and must become compulsory as part of our National Curriculum.
Financial literacy in schools would mean that those children born into disadvantaged families could learn in the classroom how to save and invest and work towards a better life.
Financial literacy in schools would mean that we could help the next generation avoid unnecessary household and credit card debt, because they would be smarter about their financial choices.
And financial literacy in schools would mean creating a generation of financially resilient Australians who are in control of their own money.
That this House:
(1) recognises that;
(a) financial literacy rates in Australia are in decline;
(b) enrolments in economic based subjects, which incorporate financial literacy in the national curriculum, has declined by 70 per cent over the past three decades;
(c) enrolments in maths-based subjects has decreased from 76 per cent to 66 per cent in 2020, and boys outnumber girls 2 to 1 in these subjects;
(d) only around 50 per cent of Australians are considered financially literate, with women having significantly worse outcomes compared to their male counterparts;
(e) on average, 50 per cent of Australians live pay-check to pay-check;
(f) financial hardship is one of the most commonly cited contributors to poor mental health;
(g) Australian students are falling behind other Organisation for Economic Co-operation and Development nations in financial literacy performance, based on the Program for International Student Assessment Survey data;
(h) 20 per cent of Australian students do not meet baseline levels of financial literacy; and
(i) the 2021 Australian Government Australian Financial Capability Survey indicates that 94 per cent of young Australians aged 14 to 17 either agreed or strongly agreed that is important to learn how to manage their money; and
(2) calls on:
(a) the Government to make financial literacy a compulsory part of the national curriculum and extend this into the senior years of schooling; and
(b) all Members of Parliament to support measured and considered action to improve financial literacy outcomes in this country across all demographics.
For my latest speech in Parliament on financial literacy, click here