Newsletter: August 2015
The Wealth Academy assists parents, teachers and professionals in the financial services industry to help their children, students and young clients to improve their financial knowledge and skills. We look forward to providing news, research, readings, hints, provocations, and some humour, to help younger generations become financially capable.
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Welcome - Marist College Ashgrove
We welcome Marist College Ashgrove as another school to implement the School-Community Financial Life Skills Program across their community.
John Dalle Cort from Australian Financial Advisers is the school's community sponsor. John recently met with the Head of Business Studies Julie Ward and Ken Swan to discuss the resources within the program and how John can further support the school community.
We thank John for his support of the Marist College school community.
Research: How often should financial life skills be taught?
In our recent research project, students were asked to indicate their suggested level of response for the statement: How often do you think financial life skills should be taught at high school?
- Never (grey bar) 1.5%
- Once a year (red bar) 12%
- Once a semester (purple bar) 19.5%
- Once a term (blue bar) 24%
- Once a month (green bar) 32%
- Weekly (yellow bar) 11%
Although these findings are preliminary (approximate percentages), they reflect a strong preference for regular financial life skills lessons. Over 65% of students believe financial life skills should be taught at least on a term basis. Approximately 85% of students believe financial life skills should be taught at least once per semester.
Notes: Preliminary findings only. Demographic information available on The Wealth Academy website.)
- For schools, such a finding should warrant further consideration of the effectiveness of the school's existing financial life skills program.
- For parents, such a finding may not be a surprise. Parents may want to work with the school to further develop the existing program.
- For the financial service industry, there is clearly an opportunity here to help schools to help their students.
Teenfinca Issue 2
The second edition of Teenfinca® will soon be distributed to subscribed schools. Articles include:
- Managing your own money is worth celebrating
- Asking questions, secret to managing money
- Young entrepreneurs
- Costs and benefits (Andrew Leigh MP)
- Education vital for career success
- Don't leave school blindfolded of financial life skills
- Develop your networks (Ian Healy)
- A career as a financial planner
- How could I Invest $5,000?
- Pete's party (contents insurance)
- Teenagers and contracts
- Work experience is important
- Think financial safety
- Profile business: Your path to health
If you have topic ideas for the next issue of Teenfinca® please contact us
What does it mean to 'put your interests first'?
Putting your interests first is a big statement – but that’s what any professional financial planner should do. What does this mean? It means that you can, and should, expect your financial planner to provide you with personalised advice that is relevant to your needs.
It also means that they will not make recommendations that suit them, because your interests come first. When putting your interests first, your financial planner will not take into account the financial impact on them, they will be only concerned about the financial impact on you. When dealing with your financial future, it’s important you can trust that you are in safe hands. If you are looking for financial advice, feel assured that FPA members sign up to a code of ethics.
You can visit www.fpa.com.au to find out more.
Parents, how do you want your child to learn financial life skills?
Research by the Australian Securities and Investment Commission indicates that “people don’t always know what they don’t know. Studies show a significant mismatch between what people say they know and what they do know” (p. 15). This is probably not surprising when we consider the complexity of the financial world.
How do we currently build our knowledge? From where do we get our information?
ASIC’s research (p. 29) indicates that the top five delivery channels for receiving financial information were:
• the internet (38%)
• books on finance (15%)
• newspaper or magazine articles (14%)
• television/radio advertising (8%); and
• personal face-to-face contact (7%).
Is it therefore surprising that we do not know as much as we think we know. The most effective way to learn is through face-to-face interaction yet it is the least used option. While there is convenience and flexibility through the more popular channels, how reliable is the information provided here, what biases sit behind those channels and is it educationally developmental. There is much to consider from such research. How do you want your children to learn financial life skills?
Parents, their teens and jobs
Recently featured in Teenfinca® Issue 1, 2015 was a feature on the advantages and disadvantages of teenagers working while in school. The following extract is from an article prepared by the Triple P program.
As children grow into teenagers, parents have to grapple with the questions surrounding their children joining the workforce, often while they are still at school; Is there a right time for children to take a job? Should they work just in the school holidays ? And what does having a job teach kids for later life?
Associate Professor Alan Ralph from the Triple P Parenting Programme at the University of Queensland says that there are regulations laid down by the government about the number of hours a child can work.
Online video: What is 'compound interest'?
Do your children or students understand the financial numeracy concept of 'compound interest'. If not, this video, available on the Khan Academy website includes a good explanation of interest as well as how to calculate simple interest.
View the video
Encourage youth to talk about superannuation
Recently, Sally Loane, CEO of the FSC advocated for an increase in superannuation contributions. Parents, teachers and the financial service industry should be sharing such ideas with our youth. While our youth have little say in the decision-making of superannuation policy, they should be kept up to date and encouraged to participate in the conversation for the obvious reason that the conversation affect their future.
The Financial Services Council CEO, Sally Loane has called for bipartisan commitment to 12 per cent superannuation contributions by 2022 in her keynote speech to the FSC Annual Conference on the Gold Coast today.
“With average balances still low – at $70,000 for women and $110,000 for men − and compulsory contribution rates paused at 9.5 per cent until 2021, Australia’s superannuation system is a long way from achieving its objective,” Ms Loane said.
“Australians are not saving enough inside or outside of superannuation. Because of this, 80 per cent of Australians will still be accessing the age pension in 2050 − after 60 years of compulsory super. Even under the Government's proposed increase in the access age for the age pension to 70 years, an astonishing 70 per cent of retirees will still receive some form of the age pension in 2055.”
Does financial literacy education work?
The following extract in a recent Finsia news update reaffirms the need for regular financial life skills lessons.
Noting the importance of young people becoming more financially literate, Russell pointed to a "robust" German study indicating that three 30-minute financial literacy lessons per week can improve students' interest in financial matters and their propensity to save. A similar study from Spain indicated that 10 hours of financial literacy lessons led to increased financial knowledge and interest in financial matters.
However, it was a study from Brazil, where financial literacy was embedded into the school curriculum, that Russell was particularly keen to comment on. Particularly given ASIC's interest in promoting financial literacy in schools. The 17-month program incorporated textbook exercises, web-based learning tools, homework that students carried out with their families and role-playing assignments.
"It showed a significant increase in improved knowledge and behaviour: Savings, being able to negotiate prices and payment options, and make budget," said Russell. Critically, she added, the program also improved 'inter-temporal choice behaviour' – or the ability to know how choices made today will affect one's future options.
Noting the importance of context in financial literacy training, she also pointed to the Brazilian program's examination of how money is involved in family life, the role of peer pressure and advertising in financial decision making, personal property protection and the importance of insurance for items such as mobile phones, work and entrepreneurship, and the role of money in the wider economy.
"It showed that financial education, when delivered in a comprehensive manner and over time, has a very strong and significant effect," she said.
Teachers: An open invitation
The Wealth Academy values partnerships and relationships that will ultimately help young people become more financially capable.
Teachers can support this cause by:
- contacting us with ideas to improve their financial education program (What do you need?)
- contributing resources or articles for us to consider for publication
- participating in our research program.
We want to help, as do our partners. Help us to help you.
Register your school here
Need help registering. Contact us
Does your school need a school financial education sponsor? We can help.
Find out more about sponsorship on the home page
Please share this newsletter with fellow parents, teachers and financial service professionals committed to the financial education of Australian youth. Financial capability does not happen by accident or by default—it requires effort. A united effort will bring greater benefits.
Yours in learning
Ken Swan, Director The Wealth Academy
Help your network: We are proud to consider ourselves lifelong learners, so please send us information, ideas and comments that you think we should share with our network. All inquiries and submissions for publication should be directed to the Manager using the contact options on our website www.thewealthacademy.com.au .
Information provided is for educational purposes and does not constitute financial advice. You should obtain independent advice from an Australian financial services licensee before making any financial decisions. Although The Wealth Academy (TWA) has made every effort to ensure the accuracy of the information as at the date of publication, TWA does not give any warranty or representation as to accuracy, reliability or completeness of the information. To the extent permitted by law, TWA and its employees, officers and contractors shall not be liable for any loss or damage arising in any way (including by way of negligence) from or in connection with any information provided or omitted or from any one acting or refraining to act in reliance on this information.