What’s surprising is that this book is more than a comprehensive treatise on investing and compounding. “Compounding is one of the most powerful forces in the world,” Gautam Baid, a fund manager at Stellar Wealth Partners India Fund, writes in his profound, engaging The Joys of Compounding.īaid’s is by far the best overall book on our list-not only for young investors, who have decades to get their investing and compounding right, but for all investors. Before you invest, you learn about compounding by committing to being a lifelong learner. Many students don't know how to manage their money.Before you walk, you crawl. The Ohio State University, for example, runs a financial coaching program to assist thousands of students each year in setting financial goals, budgeting and banking, credit, debt repayment, saving and retirement planning. Many US universities already have financial literacy courses. Preparing students to meet financial obligations upon graduation. This would include:Ĭlear, timely and customised information to inform student borrowingĬommunicating importance of graduation and major on repayment of student loans A 2019 US Treasury Department report recommended universities and colleges “should require mandatory courses to teach students financial concepts and skills”. There are signs this may be mandated in colleges and universities. In the United States, 19 states either require or plan to require students to do a personal finance course to graduate from high school. Making financial literacy classes compulsory is not an overly ambitious goal. However, the effort has not shifted the dial on school performance in terms of financial literacy and there are issues with the focus on maths in the school curriculum over building specific financial literacy skills. In its early iterations, the National Financial Literacy Strategy (later named the Financial Capability Strategy) focused on driving improvement through formal education in schools. Nothing substantial is currently being done to address this knowledge gap among young Australians. But in Australia, we don't value teaching Teaching and research are the core functions of universities. Average scores fell from 3.4 to just 2.9 out of a possible five points for young people. More alarming than the overall decline and increasing gender gap is the decline in financial literacy for those aged 15 to 24. Between 20 men went from 4.1 to 4.0 and women went from 3.7 to 3.5. The Household, Income and Labour Dynamics in Australia survey has asked these questions and shows a decline in average correct answers. It includes the person’s knowledge of financial concepts, their ability to gather and sift through information and compare products, and their confidence in making decisions involving money.Īlthough the concept is broad, there is a set of five questions about interest rates, the stock market and mortgages that are regularly used to measure an individual’s level of financial literacy. It requires you to be competent in many aspects of the financial decision-making process. It includes lodging tax returns, managing superannuation and ensuring you have enough money to look after yourself and your family. Shutterstock What is financial literacy?įinancial literacy is a core life skill. Young Australians do not have good levels of financial literacy. The 2021 ANZ Financial Wellbeing Survey found that 18–24 year olds struggle with financial planning, choosing products, understanding online risks and credit-trap awareness. And students accrue significant amounts while studying – often in the tens of thousands of dollars. Universities rely on student fees as a substantial part of their funding. It can be argued universities have a moral obligation to build financial literacy skills and educate students about how course fees are charged and then repaid when they start working. On top of other generic skills learned at university, such as communication, collaboration, problem-solving and critical thinking, we need to add financial literacy. The accord review is looking at how universities can meet the knowledge and skills needs of the future. The Universities Accord is a prime opportunity to initiate this change. This is why universities should do more to help students better understand their HECS-HELP debt and make financial decisions in general. The repayments (which do not start until a certain income threshold is reached) impact disposable income and borrowing capacity and may negatively impact women disproportionately.
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