Guidance on delivering financial literacy education
What is financial literacy?
Financial literacy is an essential life skill which is defined as ‘the process by which financial consumers improve their understanding of financial products, concepts and risks including where and how to access help or take the necessary actions to improve their financial well-being’ (Organisation for Economic Co-operation and Development (OECD), 2005). A quality financial literacy education provides students with the knowledge, skills and understandings necessary to:
- make informed decisions about personal consumer and financial choices such as learning why saving is important and how to save, comparing prices of products and services, making good purchase decisions despite strong marketing influences, understanding consumer law and rights, standards, and product safety
- understand how their consumer and financial decisions affect other individuals, the broader community, and the natural, economic, and business environment
- learn how to manage financial risks and rewards, avoid identity theft and scams, manage assets, and protect their finances through insurance, savings, and superannuation etc.
- calculate best buys, solve problems involving profit and loss, and calculate simple and compound interests.
Why is quality financial literacy education in schools important?
The imperative to teach students about financial literacy is supported by:
- the Foundation for Young Australians (FYA) New Work Order report (2015) which found that approximately 33% of students are not financially literate
- the Program for International Student Assessment (PISA) Financial Literacy 2018 (latest) national data which showed that the financial literacy performance of Australian students has declined since 2012
- the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry (2017-2019) report which found that 46% of Australians aged 15 to 75 struggle to understand simple financial documents
- OECD (2014) findings that show low levels of financial literacy impact negatively on standards of living, psychological and physical wellbeing and lead to an increased reliance on government support
- a Consumer Policy Research Centre (2020) study which shows that young Australians have been left more financially vulnerable as a result of COVID-19, with many taking out personal loans, borrowing from family, missing bill payments and seeking payment assistance.
Through the Victorian Student Representative Council (VicSRC), Victorian students themselves have called for more robust financial literacy education in schools, saying that they feel inadequately prepared for everyday financial situations such as managing personal finances and completing a tax return. For example, in the 2019 VicSRC Student Congress, students called for more education about banking, budgeting, savings, avoiding debt, understanding loans, and calculating taxes.
Financial literacy in the Victorian Curriculum
Financial literacy is part of the Victorian Curriculum Foundation to Level 10. It is taught through the Economics and Business (‘Consumer and financial literacy’ strand) and Mathematics (through a sub-strand called ‘Money and financial mathematics) learning areas. The ‘Consumer and financial literacy’ strand focuses on responsible consumer and financial decision-making at both the individual and community level. Students consider how everyday financial choices made now can affect future financial stability as well as the impact of the Australian and global financial landscape on economic stability. For more information, refer to the Victorian Curriculum search: Economics and Business.
The ‘Money and financial mathematics sub-strand’ provides students with the knowledge, understandings and skills necessary to make everyday financial decisions. At Foundation to Level 6, student learning is focused on understanding money, creating simple financial plans and calculating percentages to assist them to make informed purchasing choices. At secondary level, students develop the mathematical skills necessary to make sound consumer choices, calculate profit and loss margins and understand simple and compound interests. For more information, refer to the Victorian Curriculum search: Mathematics.
Considerations for teaching financial literacy
Financial literacy in Economics and Business should be taught through local, Australian and international issues, events and case studies. The ‘Consumer and financial literacy’ strand should not be taught on its own — it should instead be integrated with other Economics and Business strands and, where relevant, other learning areas (for example, Mathematics, Geography) and capabilities (for example, Ethical, Personal and Social). Research suggests that scenario-based/applied learning/‘real world’ problem solving foci in student learning experiences are most likely to support learning progress. Scaffolding understanding and use of explicit academic vocabulary for Economics and Business is also recommended, as is positioning students to consider options, consequences and the wider implications of decision making (for example, legal, social, environmental, political).
Financial literacy in Mathematics should be taught through practical financial problems. Such problems provide meaningful contexts for students to apply mathematical concepts such as place value, mathematical operations, efficient strategies for calculating, reasoning and problem solving. Research suggests that when financial literacy tasks are embedded in mathematics lessons, students are more likely to use mathematics as a tool to consider broader social, ethical, and economic issues. Teachers should note that home and community experiences will strongly influence student knowledge, beliefs and attitudes to money.
- Commonwealth of Australia (2019). Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry. Retrieved from: Final Report - Volume 1 ( )
- Consumer Policy Research Centre (2020). Young people wading into a sea of debt as they bear the brunt of COVID-19. Retrieved from: Young people wading into a sea of debt as they bear the brunt of COVID-19 - CPRC, Foundation for Young Australians (2015). The New Work Order. Retrieved from: fya-future-of-work-report-final-lr.pdf
- OECD (2005). Recommendation on Principles and Good Practices for Financial Education and Awareness. Retrieved from:
- OECD (2014). PISA 2012 Results: Students and Money: Financial Literacy Skills for the 21st Century (Volume VI), PISA, OECD Publishing. Retrieved from:
- OECD (2020). PISA 2018 Results (Volume IV): Are Students Smart about Money? PISA, OECD Publishing, Paris. Retrieved from:
- OECD. (2020). Many 15-year-olds- struggle with financial literacy, OECD Pisa report finds. Retrieved from:
- VCAA (n.d.) Victorian Curriculum Foundation – 10. Retrieved from:
Reviewed 19 February 2021