My mother used to say: 'You have to have money to save money'. And for the most part, she was right. But this isn't the standard advice young Australians are given at school.
Most young people grow up hearing that if you spend less money than you earn, and save a nice percentage of your earnings each week, all your financial problems will be solved. While that's nice in theory, our financial literacy programs are just that; theory.
The National Financial Literacy Strategy 2014-17 defines financial literacy as 'the combination of financial knowledge, skills, attitudes and behaviours necessary to make sound financial decisions, based on personal circumstances, to improve wellbeing'.
Put in action, financial literacy means individuals are able to 'understand and negotiate the financial landscape, manage money and financial risks effectively, and pursue and attain financial and lifestyle goals'. It is a core skill and, thanks to increasing tertiary education costs, rising job insecurity and high housing costs, it's a skill young Australians need to master earlier than their parents did.
This is why the Australian government developed its National Financial Literacy Strategy and the Australian Securities and Investments Commission (ASIC) MoneySmart Teaching program, which aims to integrate consumer and financial literacy education into the school curriculum.
The program is designed to help young adults become more 'financially responsible' by providing 'financial knowledge'. But is knowledge enough? Especially when we know there is a large gap in financial literacy between young people from the most advantaged and disadvantaged backgrounds.
The 2014 ANZ Survey of Adult Financial Literacy in Australia found that groups with the poorest financial awareness and skills are those under 25; those with no formal post-secondary education; those on low incomes and working 'blue collar occupations', and women.
While it makes sense to provide these groups with financial information on home loan interest rates and superannuation, this advice wouldn't have helped my mother. Especially when she had to decide between buying groceries for the week or getting the car serviced, knowing full well that by delaying the service she would be doing further damage to the car and, therefore, the bill from the mechanic would be more.
"Teaching people to make sound financial decisions from a place of relative financial security is one thing. Teaching people how to make decisions based on real-life scenarios with no ideal financial solution is another lesson altogether."
It's a fact that people with low incomes pay more for everyday staples and