Caroline Stewart

While the Quality of Advice Review will tackle systemic issues to address the supply of financial advice, there will still be an unaddressed gap regarding youth financial literacy, which has continued to deteriorate in Australia.

Survey results released earlier this year from the Household, Income and Labour Dynamics in Australia (HILDA) found a significant drop in financial literacy among people aged between 15 to 24.

HILDA uses a five-question test to assess financial literacy, which found the average score dropped from 3.4 in 2016 to 2.9 in 2020. The research surveyed over 17,000 households.

Ecstra Foundation CEO Caroline Stewart tells Professional Planner that this is “really concerning, as students are transitioning through to either further study or the workforce”.

Stewart believes students in Years 9 and 10 would significantly benefit from Ecstra’s Talk Money program because they are “thinking about purchases independently of their parents and making decisions about their finances”.

“[They have to make many] key financial decisions [in their life], whether that’s buying a car, travelling, paying student debt, private health insurance, insurance, mortgages, savings, superannuation.”

She also explains that mid-teenaged students need a higher level of understanding around concepts such as getting a tax file number, superannuation, payslips, and all those traditional financial literacy skills they need for life.

But although the Talk Money program aims to help students with their financial literacy, Stewart says they may still need to seek professional advice in adult life due to significant life events and important financial decisions.

On Tuesday, the Minister of Financial Services Stephen Jones announced the government planned to adopt 14 of the 22 recommendations in the Quality of Advice Review and has not ruled out accepting the remaining recommendations.

While the review has been a key topic for the advice profession over the last year and could broaden access to advice, financial literacy was outside of its remit.

“[Financial literacy for youth is] not really a topic that’s been considered in the wider discussion around financial advice,” Stewart says.

The Ecstra Foundation launched the Talk Money program in 2022 to teach children more about financial literacy. Pilot data showed that it helped over 100,000 children with their money attitudes and skills.

Stewart says the program “continues to grow and expand”, explaining that, as of 31 May 2023, there are 691 schools and 150,093 students participating in 4,223 workshops.

“As word of the program continues to build, and as schools are hosting Talk Money, [Ecstra is] seeing lots of repeat bookings and referrals,” she says.