INTHEBLACK June 2022 - Magazine - Page 19
03
02
NEIL EDMOND
MEET THE
EXPERTS
D R VA N I T H A R A G U N AT H A N
CEO AND CO-FOUNDER,
MONEYTIME
SENIOR LECTURER IN FINANCE,
UNIVERSITY OF QUEENSLAND
You bet your life it should be! Personal finance
is something every single person should learn,
because everyone’s financial stability and success
throughout life depend on it. Most parents weren’t
taught it and don’t feel confident teaching it to their
kids, so teaching it in schools is the obvious place
to start.
Ages 10-14 are when most kids are starting to
earn and spend their own money via allowances
or part-time jobs, so this is the best time to teach
them the fundamentals. It’s best they develop the
knowledge and confidence to make good financial
decisions from the get-go. However, most teachers
weren’t taught personal finance either, so they also
lack the confidence to teach it.
This is where self-taught programs are a big
advantage. These kinds of programs do the
teaching, ensuring the material is taught at a
consistently high standard and in an enjoyable and
engaging way. Most kids like being online and
playing games, so this is a great way to teach them
financial literacy.
Gamified online financial literacy programs such
as MoneyTime help kids to learn from self-taught
modules. Children are rewarded with money for
each correct answer to spend on avatars and
investments within the program. This builds
confidence in making their own financial decisions.
They spend, save, donate and invest – just like they
will have to do in real life.
Imagine the next generation not making the same
financial mistakes as their parents. People would be
happier, healthier and more prosperous. Yes, financial
literacy should absolutely be taught in schools.
Financial literacy is the understanding of concepts
such as compounding, the time value of money,
diversification of risk and the impact of inflation, and
has an outsized impact on future financial outcomes.
The benefits of being financially literate are
numerous, with the financially savvy less likely to
fall victim to financial scams, more inclined to plan
for their retirement, participate in financial markets
by investing in stocks and less likely to incur high
borrowing costs and fees.
Recently introduced FinTech products, such as
online trading platforms like Robinhood in the US
and Stake in Australia, and buy now pay later (BNPL)
schemes primarily target young consumers. While
these new innovations have made it cheaper to trade
and use financial options, they are not costless.
Research shows that consumers aged 18-29 account
for roughly 24 per cent of BNPL transactions, which
incur zero per cent initial costs, but transform into
credit card-like interest rates of about 20 per cent.
The average client of Robinhood is 26 years of age –
they hold concentrated portfolios and their option
trading results in wealth transfers to institutions.
Given the young have the least financial
knowledge, their ease of access to margin loans
and sophisticated financial instruments can have
negative consequences. While voluntary programs
by non-government organisations go some way
towards addressing the knowledge gap, it is time to
mandate financial literacy courses in high school;
however, the curriculum would need to be updated.
Many states in the US are making financial literacy
courses a requirement for graduation from high
school, and countries like Australia should follow suit.
_
Personal finance is something every single person
should learn, because everyone’s financial stability
and success throughout life depend on it. Most parents
weren’t taught it and don’t feel confident teaching it to
their kids, so teaching it in schools is the obvious place
to start.
CASSANDRA PORTELLI
_
The benefits of being financially literate are
numerous, with the financially savvy less
likely to fall victim to financial scams, more
inclined to plan for their retirement...and less
likely to incur high borrowing costs and fees.
Cassandra Portelli is head
teacher of mathematics
at Hunter School of the
Performing Arts in New South
Wales. She was a recipient
of the New South Wales
Premier’s First State Super
Financial Literacy Scholarship
in 2017, touring countries
participating in Global
Money Week and making
recommendations for change
at local, state and federal
levels. She has also worked
with ASIC on MoneySmart
teaching resources and
implemented a nationwide
Global Money Week Financial
Literacy Challenge.
NEIL EDMOND
Neil Edmond is the CEO and
co-founder of MoneyTime, an
award-winning New Zealandbased financial literacy
program for 10-14-year-olds
that recently expanded
into Australian schools.
The designer and author
of MoneyTime, Edmond is
concerned that his children’s
generation are growing
up with limited financial
literacy and is inspired to do
something about it.
DR VANITHA
RAGUNATHAN
Dr Vanitha Ragunathan is a
senior lecturer in finance at
the University of Queensland.
Her research has been
published in the premier
finance journals and featured
in international business
publications such as the
Financial Times.
intheblack.cpaaustralia.com.au June 2022 19