Declining financial literacy levels in Australia require immediate focus from government to ensure young Australians are taught about finance, understand basic money concepts and that these lessons are reinforced at key life stages, says Ecstra Foundation CEO Caroline Stewart.
Ecstra’s 2024-2025 Federal Budget submission calls on the government to elevate the importance of financial education and commit to a nationally led financial capability and action plan to help address the current urgent economic issues many Australians face. These include the cost of living crisis, the proliferation of financial scams and declining rates of financial literacy.
“We are disappointed that no progress has been made on improving financial literacy across any age group in Australia since 2016 and, as noted by HILDA[1], we have in fact gone backwards as a nation,” said Ms Stewart
“Financial literacy is a core life skill that all Australians should possess. Without a holistic approach, levels will continue to decline, especially among young people. The Government should work with a range of stakeholders, including educators, consumer advocates, community organisations, youth leaders and financial institutions on a national approach to financial education, starting in schools.
“The financial literacy of young adults is particularly critical as money habits formed in early adulthood are likely to persist, and financial behaviour has been shown to have a major impact on wellbeing.” Ms Stewart said.
“While financial literacy is included in the curriculum in subjects such as maths and commerce, students often have limited or no exposure to concepts as they move through secondary school. Elevating financial literacy to a stand-alone compulsory area within the curriculum would be a welcome start. A small investment in resources and targeted support would mean all schools could access and implement lessons that meet the needs of their students.
“With many households experiencing financial stress, no amount of personal finance education can replace important consumer protections and strong regulatory oversight. However, learning about money is a lifelong journey. School and community education initiatives are a vital part of the solution.”
Ecstra’s submission is also urging the government to further invest in front line community services, financial counselling and legal centres who are facing unprecedented demand on services as people are impacted by crisis events, housing shortages and rising inflation.
This includes further support for organisations working to address the many structural barriers to women’s economic security.
“Recent funding announcements for family and domestic violence initiatives are very welcome. Financial abuse and other forms of family and domestic abuse significantly impacts economic independence. Many women are unable to leave abusive relationships without being forced into extreme financial hardship or poverty,” Ms Stewart said.
Ecstra has committed $32 million in grant and program funding over four years, working with partners who share a common commitment to addressing long term structural issues, as well as helping equip people with the skills they need to navigate personal finances and life events.
The importance of these issues is increasingly acknowledged internationally with over 70 countries having developed and implemented national strategies to address financial literacy and capability. However, Australia’s latest National Financial Capability Strategy launched in 2022, is not currently active.
“This contrasts starkly to international peers including G-20 and OECD countries where national level strategies and initiatives continue to be prioritised,” Ms Stewart says.
“Financial wellbeing is intrinsically linked to physical health, with access to economic resources, care and support being important to maintaining good physical health. Across most health measures, Australians living in the lowest socio-economic areas fare worse than those in higher socio-economic areas.[2] Understanding and measuring financial wellbeing as part of a holistic approach is critical to prioritising and improving overall wellbeing for all Australians,” she said.
In 2022, Ecstra Foundation launched the Talk Money program in response to the financial education gap in Australian schools. The free, interactive classroom workshops teach foundational money lessons such as saving goals, managing online spending, tax, scams and financial decision making.
Talk Money has engaged 1,125 schools, delivered 7,000 workshops with more than 262,000 student bookings and continues to expand to schools nationally.
Results show that the program is having an immediate positive effect on student confidence, awareness and knowledge and on teachers’ confidence to deliver financial education. Expanding access to proven programs would play a central role in a national coordinated plan to improve the financial literacy levels wellbeing of all Australians.
Read Ecstra’s Federal Budget submission here.
