A formal definition of financial literacy is "the ability to make informed judgements and to take effective decisions regarding the use and management of money" (Australian Securities and Investments Commission).

Enterprise New Zealand Trust believe a financially literate person has:

• an ability to use credit responsibly,
• confidence in managing their money and their financial risks,
• an understanding of the long-term benefits of saving, and
• a positive attitude towards financial planning.

Simply put - financial literacy means being able to understand money and how to manage it, so that you can make good decisions that will benefit you now and for the rest of your life.

That's fine, you may say, but why should I, as a teacher, have to take responsibility for teaching this in my classroom? Surely financial literacy is a family/community responsibility?

Well to an extent, yes it is - yet we all know that many families need help in teaching their kids about responsible financial practices, whether it be due to a lack of time, inclination or ability. And as money management is such an important life skill to have, it makes sense for everybody in the community to assist in this education.

Consider this example - in a typical group of 100 teenagers today, at normal retirement age:

Which would you like you child or student to be??

Or, consider this:

If a child saved $1,000 a year (around $20 per week) from the age of 15 until they were 30, and then left that amount saved in an account earning 5% until they were 60 years old, they would end up with $93,261 - from only saving $15,000! (due to the compound interest earned).

NOW, if they didn't start saving until they were 30, and again saved $1,000 per year until they were 60, they would only end up with $66,439 - and would have put in $30,000 of that.

So, $93,261 from $15,000...or $66,439 from $30,000... it's a pretty powerful example to show your children the value of saving.

These are just a few examples of why it's important for teachers and parents to assist in the financial education of their students and children - especially these days, when credit is freely available, mobile phones are everywhere, debt and bankruptcies are on the rise and it is increasingly the individual's responsibility to finance their superannuation and retirement. So please take the time to have a look through the information on this site, such as our Financial Literacy Teaching Resources.