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Why we should get our teens interested in finance

5 min read
15 Mar 2019
Miniature figures sit on piles of coins

Ryan Gosling summed up banking quite nicely in the film The Big Short: ‘Does it make you feel bored? Or stupid? Well, it’s supposed to.’

But why should it make us feel so uncertain when we can use it to our advantage?

This becomes especially important if we don’t want to pass these same feelings about personal finance on to our kids.

In order to do this, we need to better understand how we all feel about money.

bored teenagers studying at a desk

Aussies find money talk stressful and don’t think long-term

The Australian Securities and Investments Commission (ASIC) sheds light on our attitudes and behaviours when it comes to money. Here’s what they found:

  • 35% of surveyed Australians state that dealing with money is stressful and overwhelming;
  • 45% have financial plans for the next three to five years, but only 24% have a financial plan for the next 15 to 20 years; and
  • one in five Australians did not save money in the last six months.[1]

The Financial Consciousness Index (FCI), commissioned by Compare the Market and developed by Deloitte Access Economics, tested 3,000 Australians’ belief in their ability to influence their financial outcomes, as well as their willingness to make a change to improve financial well-being.

But a significant 60% of Australians didn’t meet the basic threshold for financial literacy.[2]

It would seem us Aussies have room to improve when it comes to money smarts, but how are our children performing by comparison?

Are Aussie kids prepared for the financial commitments of adulthood?

Australian school students perform well when it comes to the financial literacy proficiency scale, with 15% of Australian students in the top percentile compared to 12% from many other countries.[3]

Economics, referred to as the ‘dismal science’ by Thomas Carlyle in the 19th century[4], isn’t the most exciting field of study for teenagers in high-school, though. Since 1995, the number of Aussie high school students studying economics in year 12 has declined from 40,000 to a little over 10,000 in 2016.[5] That’s a decline of 70%.[6]

Economics has mostly been replaced by business studies, which has seen year 12 enrolment soar to over 15,000 students in 2016 since its introduction to Australian classrooms in 1991.[7] Business studies classes are seen as easier to understand and more relevant to students when it comes to their future than economics.[8]

While they might not be interested in studying economics in high school, our children are exposed to money regardless. ASIC’s data shows that in 2017:

  • 81% of school students had a prepaid bank account or prepaid credit card;
  • 52% of students earned money from working outside school hours; and
  • 57% of students regularly saved money, and that number jumped to 67% if a student wanted to purchase a specific item but did not have enough money saved.[9]

teenage boy putting money in a piggy bank

However, back in 2015, the Programme for International Student Assessment (PISA) surveyed 15-year-olds to assess their readiness for life beyond school. 1 in 5 of those surveyed did not reach the baseline proficiency score for financial literacy.[10]

Start with yourself when it comes to financial literacy

Jacqui Dwyer, Head of Information Department at the Reserve Bank of Australia, stated in 2017 that, ‘… economics can be used to explain or debate much of the world in which we live.’[11] The study of this subject could be invaluable to our kids’ future, as long as they know how those skills will translate into different jobs.

Economics is one of the top paying fields for post-graduate university students working full-time (following IT and Engineering). Furthermore, those with economics degrees generally enjoy lower unemployment compared to other jobs.[12]

You don’t have to study economics if you’re looking to improve your financial smarts, though, and there are several benefits to learning more about money in general. As stated under ASIC’s Financial Capability strategy, learning more about money helps us:

  • reinforce good habits
  • gain confidence and control over our finances
  • stress less
  • cope better with financial change
  • save for the future and retirement.[13]

Teaching children about money is important to help them develop financial prowess and money managing skills from an early age so that they’ll be better prepared for the future.[14]

If you want to find out about financial consciousness, first take our quiz to see how you score when it comes to understanding and managing your finances. Once you understand your shortcomings, you can fix up your own habits before you consider which ones you’ll pass on to your kids.

[1] Australian Financial Attitudes and Behaviour Tracker. Australian Securities and Investments Commission. 2018.
[2] Dollars and sense. Compare the Market and Deloitte Access Economics. 2018.
[3] Financial literacy in Australian schools. Money Smart, Australian Securities and Investments Commission. 2017.
[4] The Secret History of the Dismal Science. Part 1. Economics, Religion and Race in the 19th Century. David Levy, Sandra Peart. The Library of Economics and Liberty. 2001.
[5] Studying Economics: The Decline in Enrolments and Why it Matters. Jacqui Dwyer, Reserve Bank of Australia. 2017.
[6] Reserve Bank of Australia Annual Report – 2018: Community Engagement. Reserve Bank of Australia. 2018.
[7] Studying Economics: The Decline in Enrolments and Why it Matters. Jacqui Dwyer, Reserve Bank of Australia. 2017.
[8] What Happened to the Study of Economics? Jacqui Dwyer, Reserve Bank of Australia. 2018.
[9] Australian Financial Attitudes and Behaviour Tracker. Australian Securities and Investments Commission. 2018.
[10] Australia: Results from PISA 2015 Financial Literacy. Programme for International Student Assessment. 2015.
[11] Studying Economics: The Decline in Enrolments and Why it Matters. Jacqui Dwyer, Reserve Bank of Australia. 2017.
[12] Economists. Job Outlook, Australian Government. 2018.
[13] National Financial Capability Strategy 2018: Making changes that count. Financial Capability, Australian Securities and Investments Commission. 2018.
[14] Teaching kids about money. Money Smart, Australian Securities and Investments Commission. 2018.

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avatar of author: James McCay

Written by James McCay

James is a devoted husband, father, animal lover and history buff. He studied Creative and Professional Writing at QUT, and is often buried in a book. While he writes on a variety of topics, a personal favourite is cars and all things motoring. James hopes to make a positive difference for readers through his writing.

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