Should financial literacy such as savings plans, credit scoring, personal finance, credit cards, interest rates, home loans, interest calculations, buying and selling and the value of money all form an important component of the high school curriculum?
sorry guys but its my personal crusade, but if schools could explain to students how the ATO determines someones liability to pay income tax, then they would START their working life actually engaged in the process.
There are soooooo many people who go through their entire working lives without the slightest clue how the tax system works.
For example, this is a very common conversation in my office:
CLIENT: why is my refund less than last year?
ME: well, there are a number of factors, in your case your income went up but the PAYG W was not quite enough to cover the extra tax on your extra income......hence smaller refund
CLIENT: but I kept all my receipts like you told me
ME: yes, tax deductions are imporant, but the biggest single determining factor for your refund is how much tax your employer takes out each week
CLIENT: but all the boys in the crib room are getting much bigger refunds
ME: that might be true, but I bet they wont be able to substantiate all their deductions and wont enjoy the consequences of an audit
CLIENT: but my refund is too small, it needs to be at least as much as they other guys
ME: fine, but can you substantiate all your claims for deductions
CLIENT: thats your job
ME: no my job is to prepare your tax return, give you advice and keep you out of jail
CLIENT: but all the boys in the crib room are killing it.
you see how the conversation goes around in a circle????
If I could wave a magic wand I would get these two subjects into the school curriculum:
1: INCOME TAX BASICS
2: HOW SUPERANNUATION WORKS
Happy to join in any discussion with anyone on how to get this off the ground.
It continues to surprise me how little our school curriculum covers these basic skills and knowledge. We teach quite complex finance in advanced high school economics but even those subjects do cover the basics mentioned here. This is an area that needs attention from the education departments. Cheers Forbes
For sure! The issue is always going to be though who is brought in to teach these messages.
The Dollarmite account would have the be one of the most successful programs for the Commonwealth Bank recruitment team.
They were, in fact, paying a commision to the schools for implementing the program as well as a commission for each contribution made ($5 upfront + 5% commission)
I wrote a post on this in which one person likened this to "putting Dracula in charge of the blood bank"(see post here - http://bit.ly/2zJER8j)
With technology the way it is now, there is SO MUCH that could be done to get the most appropriate people giving advice in their area of expertise.
There would be no benefit in old people in suits turning up to deliver the message as I would question how effective this would be. If you think back to "Happy Health Harold" something I remember from school, a similar program could be developed using the information and principles from the experts but delivered to kids in a way that makes it fun.
There is a commercial reality to all of this that seems to get in the way.
I don't love all of his advice but Scott Pape has proved that there is an appetite for the basics and kids are a captive audience when at school.
I am sure they could even find room for your Income Tax module Brendan :D
Simple answer - YES.
The subjects you have listed abound should be covered over the 4-6 years of high school so young Australians are familiar with how they can manage money to their favour and start to address the “ignorance or ambivalence” that many Australians may miss out on.
The starting point would be - every debt equals a corresponding credit - so there is an awareness that the money comes from “SOMEWHERE” rather than appearing on trees....
Would love to see big and small business get behind this in the same/ similar way that School banking, for me, was owned by Westpac and their passbook accounts....
Great discussion point.
Basic financial literacy would be very worthwhile. While many aspects are there at a basic level (simple and compound interest in maths) they are not put together for practical use.
An understanding of basic life skills and knowledge of how income, tax and debts tie in, budgeting could see the next generation avoid some of the mistakes many are making at the moment.
Sadly, the view of 'that's how my parents did it' leads to the same mistakes being made, generation after generation.
I remember my time at school and wondering how Pythagoras was going to help me through life….I’m still wondering.
100% agree with the sentiment. There should be a lot more focus for our kids at school to be learning on subject matters or topics that will affect them every day after they leave school.
One quote that summarises this - provides to me from a mentor I still fondly reflect upon - he said
“No NEW ways to loose money.....
only NEW people who don’t know the old ways”
If only we could share our expertise to generations we could build a stronger, more robust economy so we start avoiding the old mistakes....
Idealistic, I know -
It is possible with a platform like simplyaskit to create this literacy with the professionals online at any one time..👍🏽
I am constantly stuck on the points of credit scoring or taxation when involved in discussions at all levels.
“It isn’t worth me working an extra shift because I’ll pay too much tax” is a common one
“I’m thinking of applying for a credit card so that I can improve my credit score” is another
These days customers have no genuine understanding of what serviceability is or how it is measured as well.
I think if a 17 year old was able to start their plan to buy a home with tools at their disposal we wouldn’t get the “smashed avo” discussion at all.
100% agree. I think it should be part of school and we should start having more focus on these subjects at school level.
Not aligning to one particular bank either should be a focus, lets open the playing field up, lets not just make it about sales for the banks to cash in
Lets keep the focus on education......
I think it would be good to put into part of the mathematics curriculum. My eldest daughter detested mathematics and needed a tutor to get her through her HSC. She loves Real Estate (so we tried to give her assistance on these areas). Because this interested her she became a human sponge. What she has learned about personal finance and investment due to her interest in the subject since leaving school is nothing short of amazing to me. I think she would have enjoyed maths if these items were covered in the curriculum. Looking at myself I am sure I would have been better equipped if they had been covered when I was at school.
It's unbelievable really that a proper financial grounding isn't implemented as part of the curriculum in even the most expensive private schools in the country today. After all, Albert Einstein told us years ago that compound interest was the most powerful force in the universe. So it seems almost negligent not to teach our kids the value of interest, as well as time/money, leverage, and a host of other topics related to finance, so that they can venture out into the workforce with some idea of how better to manage whatever they reap from their careers.
We do want a lot of things for our children these days - emotional intelligence for instance, as part of their survival kit for life. But what about "financial intelligence". My own children are still too young to grasp the concept of money, but I would certainly welcome some type of financial instruction being part of their education.
Of all the things I learned in high school (let alone an economics degree at university) none of them prepared me better for the really important financial decisions of my life than my father’s homespun wisdom on money. And I am still using this advice (with supplementing texts) some 30 years after graduating high school.
Decisions around investment, understanding tax, preparing for retirement etc should be covered off in high school curriculum. If you could just eliminate waste of money in your life you would be miles in front when the financial challenges of home ownership, children etc enter your life.
Personally i think that at a basic level it should be included in the curriculum however you will get some resistance from the education departments because the timetable is already full. So my suggestion would be in the form of extra curricular activity with the educator a specialist in the field.
Teaching kids about money is obviously an important skill.
Like all habits or skills, it's easier when developed from an early age and money skills are no different.
The more financially savvy your children are the better spending decisions they will make throughout their lives.
I think teaching everyday challenges and topics as part of the school curriculum is a great idea, but I think parents being good "financial role models" is a crucial part of the puzzle too.
Kids learn from watching their parents all the time (good and bad) and these behaviours are formed very early, so maybe its a case of learn the theory at school and learn the practical from their parents.
Absolutely agree and for all the reasons people much more qualified than me have put forward in this forum.
In fact if you took a poll of the entire country my guess is you’d an overwhelming “yes”.
So it begs the question why hasn’t it been implemented? I don’t think it’s a problem of developing a curricula or getting suitably qualified people to teach ......rather than government will to act,
So how to create that will? Be interested in people’s thoughts,
Absolutely we need to have more education about finance literacy and money in schools.
Money is "invisible" these days. Its deposited into your account and you simply just tap your card / your phone / get card less cash from ATM to make ends meet. The real tangible value of money is gone especially with the younger generations as they have never had a physical pay packet.
I remember from my first pay packet in the yellow envelope and separating the $24.25c I was paid - I phsyically split it between savings and spending and put one in a jar and one in my wallet. This was valuable in setting up good habits as soon as I got paid.
Especially with credit reporting going the way it is, having education on our finance system is critical otherwise there will be a generation with late payments on their credit file and they will have no idea why and no one to bail them out.
A lot of people who choose to go down the route of professional sports, football, cricket, golf etc they will go straight from high school with little exposure to this very important parts of life! They will come across a lot of disposable income with no education and a lot will come to the end of their careers with not much to show for it!
So yes, a must!