The Australian Securities and Investments Commission (ASIC) has welcomed the results of the first international study of students' financial literacy but says there is more to be done to prepare young Australians for the challenges of financial decision-making beyond school.

Released by the OECD as part of its Programme for International Student Assessment (PISA) 2012, the study assessed the extent to which 15-year-olds across 18 countries have the financial literacy knowledge and skills to successfully transition from school into higher education, employment or entrepreneurship.

ASIC Senior Executive Leader for Financial Literacy, Miles Larbey, noted that Australian students scored significantly higher than the OECD average, ranking equal third (fourth highest) out of the 18 participating countries and economies, with similar results to students in Estonia and New Zealand, and behind Shanghai-China and the Flemish Community of Belgium.

‘As the Australian Government agency responsible for financial literacy, ASIC welcomes the fact that 16% of Australian students were top performers, compared to 10% of students across the OECD. On the other hand, one in 10 Australian students performed below the baseline, which suggests they are less likely to be prepared to deal with the financial decision-making demands of everyday life', said Mr Larbey.

‘The research also found that 79% of Australian students agreed that it's important for them to learn money management at school.

'Many 15-year-olds already have experience with financial matters, such as managing mobile phone contracts, bank accounts or earning money from working outside school hours. Understanding concepts such as how to budget and value for money are important for financial wellbeing from a young age and throughout life', Mr Larbey said.

The release of the PISA study coincides with ASIC's release of an independent evaluation by the Australian Council of Educational Research (ACER) of its implementation of the Australian Government's Helping Our Kids Understand Finances (HOKUF) initiative – now known as ASIC's MoneySmart Teaching program. The evaluation found that ASIC's implementation met the criteria of appropriate, effective and efficient.

ASIC's MoneySmart Teaching program is the only national financial literacy program for schools supported by states and territories and endorsed by Education Ministers through a National Partnership Project Agreement. The program aims to promote and support consumer and financial literacy in schools through teacher professional development and quality teaching resources aligned to the Australian Curriculum.

'Today's PISA results highlight the importance of programs like ASIC's MoneySmart Teaching in building the financial literacy of the next generation. ASIC encourages principals, teachers, parents and students to visit our MoneySmart website to find out more about the program and to access free professional development and classroom resources', Mr Larbey said.

ASIC's MoneySmart Teaching resources are freely available at moneysmart.gov.au/teaching

Further information about the PISA study as well as the Australian National Report produced by ACER, Financing the Future: Australian students' results in the PISA 2012 Financial Literacy assessment is available on the ACER website.

Background

PISA 2012 Financial Literacy assessment

The PISA 2012 Financial Literacy assessment is the first large scale international study to assess the financial literacy, learned in and outside of school, of 15-year-olds nearing the end of compulsory education. In this study, financial literacy is defined as “…knowledge and understanding of financial concepts and risks, and the skills, motivation and confidence to apply such knowledge and understanding in order to make effective decisions across a range of financial contexts, to improve the financial well-being of individuals and society, and to enable participation in economic life”. For a full explanation, see the PISA 2012 Assessment and Analytical Framework.

This is the first time that financial literacy has been a part of the OECD’s PISA, a triennial international survey which aims to evaluate education systems worldwide by testing the skills and knowledge of 15-year-olds.

Eighteen countries and economies participated in the assessment of financial literacy, including 13 OECD countries and economies: Australia, the Flemish Community of Belgium, the Czech Republic, Estonia, France, Israel, Italy, New Zealand, Poland, the Slovak Republic, Slovenia, Spain and the United States; and five partner countries and economies: Colombia, Croatia, Latvia, the Russian Federation and Shanghai-China. A total of 29,000 students participated in the assessment, including approximately 3,300 Australian students from 768 schools.

Some of the study findings relating to Australian students' performance include:

• 16% of Australian students performed at the top level of proficiency (level 5), compared with 10% of students across the OECD
• 10% of Australian students were low performers in financial literacy (level 1)
• Male and female students scored at the same level in financial literacy on average
• Some 11% of the variation in student performance in financial literacy is associated with socioeconomic status, about the same as the OECD average
• Students in metropolitan schools performed significantly better than students with similar socioeconomic status who attend schools in rural areas
• 82% of students have a bank account and 73% earn money from work, including working outside school hours, working in a family business or performing occasional informal jobs.

As the Australian Government agency responsible for financial literacy, ASIC facilitated Australia’s participation in the PISA 2012 Financial Literacy assessment in partnership with states and territories. The research was conducted by ACER. The next PISA financial literacy assessment will take place in 2015.

ASIC's MoneySmart Teaching program

ASIC's MoneySmart Teaching program:

• promotes a curriculum based approach to teaching financial literacy in Australian schools
• builds teacher capability through professional development and personal learning
• provides free teaching resources, aligned to the Australian Curriculum, that use real life consumer and financial contexts to build student capability
• creates partnerships with education departments and schools to progress financial literacy around Australia.

ASIC's MoneySmart Teaching program builds the financial literacy capabilities of young Australians in relation to five basic financial principles: planning, spending, saving, donating and investing.

ASIC's MoneySmart Teaching program commenced under HOKUF, an Australian Government initiative between 2010 and 2013. Further funding has been provided to ASIC to continue the program between 2014 and 2017.