“We stopped learning about financial literacy in year 10.”
That was just one of the comments made to me this morning as I hosted a workshop at a co-ed high school for a group of year 11 girls about money and the economic progress of Australian women.
Other comments made to me were that “my brother gets more pocket money than me because he mows the lawn and I only help around the house.”
It was also said to me, that “Dad thinks that because he works he doesn’t have to do housework, even though my mum also works the same amount.”
None of this is new information, we know that there is financial inequality and a lack of financial literacy in Australia, and that this starts at a young age.
What’s troubling to me is that as I spent an hour with these girls, I’d really hoped to hear better from them on the way they see the world.
But when we have an Australian school system where maths, which is where we tend to learn about money, is not compulsory in years 11 or 12, then a lack of financial literacy among school kids is not that surprising.
This all comes as the latest HILDA survey, which is the Household, Income and Labour Dynamics in Australia (HILDA) report, revealed many interesting findings particularly around the lack of financial literacy among women.
Perhaps most disturbing was a survey, which asked 17,000 respondents five questions relating to financial literacy. It found only 35 per cent of women answered all five questions correctly, compared with 50 per cent of men.
While it’s troubling that women are less financially literate than men, it must be said that both genders clearly need assistance in this area.
Only 24 per cent of all respondents aged 15 – 24 answered all five questions correctly compared with 55 per cent for those aged 55 – 64. The questions are listed at the base of this article.
What’s clear to me is that the Australian schools system needs to more support to help better educate young people around money, particularly young girls.
We also need to explain to girls why financial literacy matters, how it affects their life and careers, what happens when a woman takes career breaks to have kids, what happens to their pay and superannuation, as well as how to build and protect their own wealth through smart decision making.
But most important of all is to educate girls on finding their voice and why achieving financial independence is equally as important for boys as it is for them.
In case you were wondering the questions put to those surveyed were:
1. Suppose you put $100 into a no-fee savings account with a guaranteed interest rate of 2% per year. You don’t make any further payments into this account and you don’t withdraw any money. How much would be in the account at the end of the first year, once the interest payment is made?
2. Imagine now that the interest rate on your savings account was 1% per year and inflation was 2% per year. After one year, would you be able to buy more than today, exactly the same as today, or less than today with the money in this account?
3. Do you think that the following statement is true or false? “Buying shares in a single company usually provides a safer return than buying shares in a number of different companies.” (True or false?)
4. Again, please tell me whether you think the following statement is true or false: “An investment with a high return is likely to be high risk.” (True or false?)
5. Suppose that by the year 2020 your income has doubled, but the prices of all of the things you buy have also doubled. In 2020, will you be able to buy more than today, exactly the same as today, or less than today with your income?