Financial literacy needs to be compulsory

Lots of people aren‘t great with money and that’s probably because they haven’t had much in the way of financial training and it's odd that for something that’s so important there is relatively little of it taught in schools.

Financial literacy is woven into the curriculum and offered to business subject students, but there is currently no subject for or clear reference to a structured financial literacy education.

One person who is good with money is Marlies Hobbs and she believes financial literacy should be a compulsory subject taught throughout school like English.

Hobbs has started businesses, worked in the corporate world, invested in real estate, ran a café that turned into a franchise and has written a book on the subject of getting on top of money early in life.

For her and husband Jai, success was a matter of taking risks and learning by trial and error, lacking their courage, it might be easier to impart some of the advice they have put together in their book FLY (Financially Literate Youth) to young people.

“Despite there being many great financial literacy resources available through MoneySmart by ASIC, teachers have explained that there is simply no time allowance for them to effectively deliver this essential education to students.

“We feel it is critical life skills education which should be a compulsory subject in schools, not just for senior students but all throughout the schooling journey,” says Hobbs.

She says that education and financial experts should work together to develop a structured and progressive financial literacy education for inclusion in the curriculum and delivered throughout all the years of schooling.   

“FLY would serve well as a textbook and reference guide for senior students, with the opportunity to also develop workbooks to assist with the assessment process for students,” Hobbs says.

For one reason or another, money isn’t something to be talked about, we’re told at an early age that it’s beyond the pale to mention money explicitly and god forbid we ask what a person earns. This needs to be changed.

“Having discussed this with several friends and family across a few generations, it seems that in the past, children speaking about money has often been taboo. Parents would respond ‘that’s none of your business!’. Then those children would fly the nest completely unprepared for what was ahead of them. 

“Thankfully, times are changing, and parents and children are having more open and transparent conversations about money, helping prepare them for life on their own.

“Being financially literate from an early age can only be a positive, with effects such as: increased motivation, goal setting skills, work ethic, sense of security and understanding, an increased sense of reality, appreciation, a less entitled mindset, increased initiative and responsibility, a sense of purpose and a sense of contribution.” 

Hobbs feels the dining table can be a great place for family financial literacy discussions to start and some tips on getting the idea of money management into kids’ heads might be using imitation/play money to help kids understand the form, function and value of money or playing games where they use their play money to pay you for things, like meals and doing things for them. Make the value realistic to help them develop some context on what things are worth.

“Parents might implement a weekly pocket money system in exchange for them doing jobs and help their kids set goals and save for them. When grocery shopping, get them to read prices, spot deals and compare products and prices.

“Get them to place their ice-cream order and pay for it (even if it’s with your money) to build their confidence when transacting, be open and honest with them, as far as is appropriate, when discussing what things are worth; cars, properties, holidays, hobbies.

“Encourage them to ask you what things cost and if you don’t know, research it with them. If they initiate the conversation and are interested in the subject matter they are likely to engage, retain and therefore learn more,” she says.

Failing to educate ourselves and missing opportunities is a common money mistake that we make, read, listen and learn as much as you can. Borrowing money for depreciating assets is another pitfall, so Hobbs recommends you save and pay cash where possible to avoid hefty interest.

“Procrastinating with starting to invest is a common error: don’t overthink it, educate yourself and then start small. Whatever you do, just START, consciously take responsibility for the future, knowing humans are not naturally wired to do so, prioritise your financial literacy education to be empowered and seize opportunities,” says Hobbs.

 “Our journey has been quite a ride. How we got better at administering our finances has been a lifelong journey that will never end. In business we improved our recording, reporting and reviewing processes, with sophisticated systems to analyse our data and regular meetings to discuss the results and our action plans.

“We learnt to say ‘no’ more often. Just because you can, doesn’t mean you should. We took a family view; we stopped competing and seeking validation from our achievements. We worked as a team, utilising our strengths, focusing on the best outcomes for our family.”       

Presented in large type and written in punchy, easy to understand language FLY: Financially Literate Youth is a reference for all financial issues from investing to business to tax and super and is available through Penguin, RRP $29.99