May.18.2020

Financial literacy programs taught in schools are exposed as value-ridden, flawed & totally inadequate

By Carly Sawatzki

Most of what is taught and learned in financial literacy programs in schools reflects middle class values and a conservative ideology about the role of government and individuals in achieving economic prosperity. The COVID-19 pandemic is now disrupting this thinking.

Governments tend to take a conventional view of financial literacy, seeing it as a toolkit of knowledge, skills and behaviours that leads to “effective financial decisions” and “financial wellbeing”.  It is an approach that emphasises the need for a financially responsible citizenry and invests heavily in policy and education initiatives to achieve just that.

This view (and the financial literacy initiatives that stem from it) assumes that by knowing how financial products and services work, you can access “financial solutions” that will help you to be “in control” of your money. Related to this is the assumption that financial difficulties can be avoided or overcome by understanding the difference between needs and wants and being responsible in how you bank, budget and save. These are the basics.

Schools and teachers have long been diligently preparing our young people for economic and financial participation based on this conventional approach. And the rest of us, some armed with financial self-help books, have been organising our financial affairs in much the same way.

But COVID-19 is challenging the way we think about personal and public financial practices. The often-anguished face of Australian Treasurer, Josh Frydenberg, shows how this is playing out for our current Federal Government. And I believe COVID-19 is highlighting that our approach to financial literacy in schools, while serving governments and the finance industry, does not go far enough.

Broken promises

As we adjust to our new reality in a post COVID-19 world, we are coming to realise that the old view of financial literacy has done little to prepare us for the experience of financial loss and hardship.

It’s something those familiar with socioeconomic disadvantage have always known: the conventional way of thinking about money is not particularly helpful.

Take savings. Most Australians have some savings, but nowhere near enough. The Grattan Institute reports that even the highest fifth of income earners have less than four weeks’ income in the bank. The Barefoot Investor only recommends emergency savings equivalent to three months of living expenses. The story about savings is unravelling.

In recent weeks, many people with travel insurance and income protection insurance have been shocked to discover that their policies do not include cover against losses associated with a pandemic.

The promise that financial practices like saving and insuring hold the key to personal financial security and wellbeing has been broken.

A new game

The COVID-19 lockdown reminded us what is a need, what is a want, and what is a privilege. The financial playing field is being levelled as we change the way we talk about money as a limited resource and the Reserve Bank prints money to fund a compassionate response.

Federal and state governments have announced stimulus packages totalling in excess of $500bn – an extraordinary figure.

The banks are allowing customers to hit pause on home loan repayments. Landlords and tenants are being encouraged to negotiate in ways that give more power than ever to the tenants.

Many people are suddenly eligible to access significant sums from their savings in superannuation.

It’s a lot to take in.

And most of us are now having to make important decisions about complex options on the run and under duress.

But with lines stretching outside Centrelink offices, difficulties accessing the MyGov website and hours spent waiting on-hold to banks and other financial service providers, many will lack the energy, know-how and confidence to advocate for their rights and entitlements.

Why? Because very few have had the opportunity to practice these sorts of “What if?” scenarios at school or in other formal education settings.

Those who are literate, numerate, digitally savvy and able to think critically will fare better in their quest for assistance. That’s not to say it will be easy.

What comes next?

Right now, Australia is learning the importance of a robust science and mathematics education. We are also learning about the purpose and capacity of the public services our taxes fund.

This learning is uncomfortable, confronting, painful.

At the same time, we are being given a taste of what’s possible.

Within communities, people are caring for those who are vulnerable by sharing money and food. Rough sleepers are being housed and childcare is free. Not because we’re moving towards socialism, but because sharing resources in this way is essential to our future. In fact, it always has been.

Beyond COVID-19, I am hopeful that schools and teachers might study this crisis and search for its legacy.

Perhaps the national conscience will be transformed, and we will question government ideology that expects us to be financially literate and responsible, but runs important public services like healthcare and education on empty.

Beyond this unimaginable economic and financial crisis, we will need a more progressive vision of a financially capable citizenry.

Dr Carly Sawatzki is a lecturer in the School of Education at Deakin University. She researches the teaching of humanities, mathematics and numeracy in consumer, economic, and financial contexts (i.e., financial capability / financial literacy / money and financial mathematics).

Republish this article for free, online or in print, under Creative Commons licence.

One thought on “Financial literacy programs taught in schools are exposed as value-ridden, flawed & totally inadequate

  1. Leon de Bruin says:

    Thank you Carly, some valuable and pertinent points made here- Misinformation and appropriation of funds into unsubstantiated research based decision making segues into the larger issue Of primary and secondary general literacy skills and the wholesale adoption of millions of dollars into dubious and unsubstantiated reading programs in many schools

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