The Solution to the Financial Literacy Problem is to Educate the Young - Where are we Now?

3 Pages Posted: 5 Sep 2011

Date Written: August 25, 2011


Over the last two decades the need for a financially literate population has grown in importance. In Australia the introduction of a compulsory superannuation scheme in 1992 signaled to Australians that retirement needs would now need to be self funded rather than relying on government funded social security. Hence in Australia it is imperative that individuals possess both the financial knowledge and capability to make sound financial decisions. The whole issue of financial literacy has been compounded by the fact that consumers are now required to make decisions in relation to an ever increasing range of complex products and services.

As a means to navigate through this financial maze, there is a consensus as to the importance and need for individuals to be financially literate. Both the government and the private sector have encouraged the development of financial education programs as an important tool in remedying the current financial literacy deficient reported in the results of all the several ANZ Surveys from 2003 to 2010.

The Rudd Labor Government in an effort to centralize initiatives and to improve financial literacy programs transferred responsibility for financial literacy from the Financial Literacy Foundation to the Australian Securities and Investments Commission (ASIC). ASIC has strongly promoted the need to develop confident and informed consumers and investors by providing quality financial education. This focus was recently reiterated in the ASIC Report 229 in March 2011 setting out the strategy for the development and delivery of initiatives to improve financial literacy levels in Australia (ASIC, 2011).

This National Financial Literacy Strategy focuses on education through established education and training pathways as the cornerstone of bringing about long-term generational change in financial knowledge, attitudes and behavior (ASIC, 2011). Accordingly the government has emphasized the need for financial literacy education to begin in schools through the use of the State Education Departments mandatory curriculum. In particular this National Strategy has been developed to improve the level of financial literacy among Australian students, with a focus on incorporating financial education through the existing school curriculum beginning in kindergarten and through to year 12 students.

The USA through the efforts of the Jump$tart Coalition has possibly contributed to the most comprehensive long term study on students and financial literacy outcomes. The Jump$tart Coalition has been measuring financial literacy among High School Students since 1997 and has become one of the most widely referenced resources in understanding what young people know - and don’t know - about personal finance (Jump$tart Coalition, 2011). In recent reports the coalition has found a declining level of competency in respect of financial literacy despite an increase in emphasis and coverage of financial topics in school curriculums. The reports suggest a lack of motivation and relevance to the student’s current situation may provide a reason for this recent decline.

The aim of this research paper is to compare the government’s financial literacy initiatives in schools in Australia to that undertaken in both the USA and to a limited extent in Europe. The paper reports on the outcomes of these programs and suggests possible reasons for their success or failure and discusses the varied approaches used in schools when it comes to financial literacy curriculum. The paper further reviews the results of surveys undertaken evaluating such programs and seeks to comment as to whether there is a measurable improvement in financial knowledge, attitudes and behavior directly related to imbedding financial literacy in school education curriculum.

Keywords: financial literacy, ageing population, government policy, education

JEL Classification: D12, I21, I22, I28

Suggested Citation

Taylor, Sharon Maria and Wagland, Suzanne, The Solution to the Financial Literacy Problem is to Educate the Young - Where are we Now? (August 25, 2011). Personal Finance & Investments (PF&I) 2011 Conference Paper. Available at SSRN: or

Suzanne Wagland

Western Sydney University ( email )

PO Box 10
Kingswood, NSW 2747

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