ASIC behind push to boost financial literacy

By John Collett
Updated August 2 2014 - 1:08am, first published August 1 2014 - 2:47pm

Despite cuts to its funding in the federal budget, the Australian Securities and Investments Commission has committed $5 million a year for three years in an attempt to strengthen financial literacy across the nation.

Much of the effort is directed at children. Researchers have coined the term "financialisation" for the process.

Financial literacy is being added to schools' curriculums around the country. About 10,000 teachers have already participated in the financial literacy teaching training program co-ordinated by ASIC. Under the new strategy, a further 20,000 teachers and pre-service teachers will receive training to help them teach financial literacy over three years.

ASIC's MoneySmart website, with tips and tools to help people manage their money, will be enhanced with more features. There are some signs financial literacy is improving among teenagers. In a recent financial literacy assessment by the Organisation for Economic Co-operation and Development, Australia's 15-year-olds were rated fourth out of 18 countries and economic areas that participated.

The Programme for International Student Assessment, run by the OECD, tests students in science, mathematics and reading. In 2012, it added, for the first time, a test on financial literacy. The results, released last month, show Australian 15-years-olds achieved an average score of 526 points, significantly higher than the average of 500 points.

Only two economies, Shanghai in China and the Flemish community of Belgium, performed significantly higher than Australia. Almost 82 per cent of Australian students tested reported having a bank account.

A report by Westpac on children and money released last year found that children who worked for their pocket money and tracked it in an account were more likely to appreciate the value of money. 

Financial Rights Legal Centre principle solicitor Katherine Lane welcomed the new measures. She said financial literacy was about explaining how a car loan worked and how the interest worked, which was good.

However, she said financial literacy should also show how to avoid problems.

"Avoiding problems is just as important as financial information," she said.

Ms Lane said she doubted whether financial literacy education would have helped anyone avoid the financial planning disasters of the past.

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