The simple money lessons financial advisers wish were taught in school

When I was in high school, unless you studied accounting as a subject, there were no financial literacy lessons – nothing on how taxes work, nor super, budgeting or responsibly managing money.

A lot has improved since then, but the challenge with different secondary school curriculums around the country is that some students are better off than others when it comes to financial literacy.

Financial adviser Dawn Thomas wants superannuation to be taught to secondary schools students.Credit: Trevor Collens

Dawn Thomas is a senior financial adviser at The Wealth Designers, a financial consultancy with offices in Perth and Sydney. She facilitates financial literacy sessions with secondary school students.

If it was up to her, Thomas would prioritise teaching students about superannuation.

“For example, when does superannuation get set up?” she says. The answer (for anyone wondering) is when someone turns 18 and gets their first job, or is under 18 and works more than 30 hours a week.

What happens if you don’t choose a fund? Answer: your employer chooses for you. “And that fund will then follow you unless you choose otherwise. This could mean that your employer is choosing one of the most significant vehicles of your wealth,” Thomas says.

Young people often don’t learn about superannuation until they land their first job.

Thomas would also like students to know about their super investment options instead of just going with the default. “Young people in the default option is a missed opportunity because they have a long investment timeframe, which can ride out the volatility of more growth-orientated profiles,” she says.

“This could make a difference of over $100,000, conservatively, over their lifetime.”

Teachers can get students to use tools or calculators to show the impact of a fund with a higher long-term return.

Financial abuse is the other topic Thomas wants greater focus on. “Help them see the signs. Make them aware that financial abuse is usually apparent where other forms of domestic violence occur,” she says.

‘By helping students understand the role of investments like shares, they can start to build wealth earlier.’

Corey Wastle, Verse Wealth

”While it can happen to anyone, it disproportionately impacts women. Stress the importance of financial independence: being able to earn money, knowing where money is even when you are a couple, having your own bank accounts.

“This is not a topic that is openly spoken about, and it would be great if young people recognised positive and negative behaviour around money.”

Corey Wastle, chief executive of Melbourne-based financial advice firm Verse Wealth, hopes secondary school students are taught about building good money habits given “learning how to manage your day-to-day finances is a fundamental life skill”.

“By teaching students how to set up a budget, distinguish between needs and wants, and make mindful spending decisions, we can help them feel more in control of their money,” Wastle says.

“These skills lay the groundwork for avoiding debt, reducing financial stress and creating healthy habits that lead to long-term financial wellbeing.”

Wastle also wants to see students introduced to the basics of investing and how the power of compound interest can be life-changing. “A great example is Warren Buffett, who began investing at the age of 11. Because he started early, he was able to take full advantage of compound interest over decades, helping him grow his wealth to extraordinary levels.”

“By helping students understand the role of investments like shares, they can start to build wealth earlier and create more opportunities for long-term wealth,” he says.

Rashmi Shankar, a financial adviser based in Adelaide, says goal-setting can empower young people and inspire them to achieve financial independence.

“Teaching the importance of saving from an early age and learning to take responsibility of handling money will empower young ones to set realistic goals, so they can aspire to achieve financial independence,” she says.

She says it’s worth getting students to consider how they’d allocate their earnings in line with their short- and long-term goals. This includes understanding the difference between getting bank account interest versus long-term growth by investing in the sharemarket or a managed fund.

“This helps them understand the risks involved and prepares them accordingly to make the right decisions,” Shankar says.

• Advice given in this article is general in nature and not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.

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