by Scott Pape - July 4th 2009
I didn’t buy a Lotto ticket this week, despite the crackpots who were talking up the dream of winning the jackpot. I’ve long argued that Lotto is a tax on people who can’t do maths.
I thought that was the case until I met a university maths professor this week who had published work on the futility of gaming odds. Midway through explaining to me the complex ways gamblers are manipulated, he sheepishly admitted:
“Actually, I did buy a wee quick pick for Tuesday night.”
Huh?
This is but another example of how otherwise intelligent people fall for spin. It happens everywhere, but particularly in politics.
Cast your mind back to when our PM was Kev07 and he was determined to defend working Australian families against the axis of evil increasing food prices, increasing petrol prices, and increasing ratings for The Chaser.
On gaining government, Rudd made good on his election promises and proceeded to flog our two dominant retailers with a feather.
First came the idiotic FuelWatch scheme, which was given the thumbs up by Woolies (as it generally leads to higher prices), but thankfully got the thumbs down in the Senate.
Next came GroceryChoice, a website the Government set up to track prices so consumers could save money.
According to The Australian newspaper, the site peaked at 3.3 million hits in August but fell to 100,000 just two months later when people worked out it didn’t work. Worse, the Government wasted $13 million of our money on this dud. Fair shake of the sauce bottle, mate. That’s a lot of kransky, Kev.
Apathy/stupidity v. spending
No amount of government spending can eliminate apathy or stupidity, especially when that spending is based on populist policy in an election year.
Yet this week I caught up with an international financial expert who had some brilliant ideas on how the Government could achieve its aim.
Wendy van den Hende is chief of the Personal Finance Education Group, a British charity that’s a world leader in teaching and promoting financial literacy within the education system. She was brought out by ANZ to take a look at the initiatives we have in place.
Financial Education
When I spoke to her this week she suggested that there were many similarities between Britain and here, in that both countries have only relatively recently begun to introduce a standard program of teaching money management in schools.
PFEG does this by integrating the topic into existing subjects such as maths, which makes a lot of sense and would make learning more practical.
I’ve always found it ironic that most people struggle to calculate percentages, yet nearly all our financial decisions are based on them.
The other depressing similarity between Britain and here is that the least financially literate are people aged between 18 and 40.
Waiting at the school gates are companies that have built their businesses around exploiting this lack of knowledge.
Thanks to PFEG, the UK has now become a leader in financial literacy. However, van den Hende is pragmatic: “Just because it’s in the curriculum doesn’t mean that the schools will teach it well.”
Financial literacy=low priority
While we’re on different sides of the world, van den Hende and I have come across the same challenges: financial education is a low priority for most schools because of already stretched resources, and most teachers have no experience (or interest) in teaching the subject.
Here’s where van den Hende has a cracking idea: given that schools employ specialty teachers for subjects like music, woodwork and languages, why not have a teacher whose sole focus is financial education?
I once made an ashtray (which admittedly looks kind of like a tea-cup) in woodwork, but have yet to pick up another Jigsaw since, and the last time I used Pythagoras’ theory outside of a Year 8 maths class was at a pub trivia night (and I still got the answer wrong).
Yet managing my money is something I’ve had to do every single day since leaving school. It’s guaranteed that all students will be tested in the big exam we call life and, unlike other tests, the results will have a direct and substantial influence on their lives and, more broadly, on our national economy.
I’ve seen lives ruined because of poor financial choices, even by supposedly smart people. I’ve also talked a lot at schools and spoken to kids who thought they were dumb because they couldn’t calculate calculus. Yet I explained to them that academic success has little to do with financial success (despite what their teachers would have them believe).
The education system I went through was more like a sausage factory designed to get me into the university of my choice, so I could get the career of my choice, so I could ultimately have choices in life.
My love of learning and the desire to relate it to real life came long after the days I could finally stop asking, “Will this be on the exam?”
Many students are studying hard to get a good career, where one determinant is the bucks that it brings in, so let’s be honest and start giving them the basic building blocks to manage their money (which adds up to millions over their working lives).
More than book learning
A key part of this learning is simply to get young people to start questioning the offers that are made to them. (And in an ideal world this would follow on to some of those in politics and the media who have been guilty of hyping both Lotto draws and costly government gimmicks.)
I’m passionate about financial education because I’ve seen the self-confidence that it breeds in people.
Armed with financial knowledge, young people not only see that a Lotto ticket is not a financial plan, but have the ability to score their own first division win odds-on.
Tread your own path!
Photo:www.flickr.com/photos/ejpphoto/2613402398/
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