education.govt.nz

Creating financially capable New Zealand students

Issue: Volume 94, Number 15

Posted: 24 August 2015
Reference #: 1H9crv

Shifting from financial literacy to financial capability

Two students studying

The term ‘financial capability’ recognises the need for sustained behavioural change around money. This includes preparing for the future, and engaging in pro-active and long-term financial planning.

The Commission for Financial Capability (CFFC) held a summit in Auckland recently, at which UK financial capability expert Elaine Kempson was a keynote speaker.

In her address, Elaine argued that financial capability was more empowering than the previously-used term ‘financial literacy’.

She describes financial capability as encompassing:

  • day-to-day money management (including planning and keeping track of spending, and living within your means);
  • planning for future needs: both expected and unexpected
  • choosing and using appropriate financial products;
  • informed decision-making (including learning from mistakes, and knowing how and why to get more information).

Elaine describes a past approach to ‘financial literacy’ that focused on an individual’s knowledge and skills in isolation from their actual environment.

As a single, measurable concept, and with an emphasis on workshop-based training for adults, ‘financial literacy’ has been seen to fail to target the areas where need is greatest.

A purposeful shift from ‘literacy’ to ‘capability’ takes into account education and income biases. It recognises that financial behaviour is shaped by our beliefs, social norms, and the environment in which we live.

In the New Zealand context, the shift from financial literacy to capability is aimed at creating a more accessible and universal approach to financial education, says CFFC chief executive Diane Maxwell.

“We wanted people to think about this as a capability, like any other practical skill they might have, rather than as an academic or theoretical thing.”

“Everyone knows they should save; everyone knows we should spend less than we earn – but the real question is ‘what stops us doing these things?”

Starting young

It’s never too early to start building up financial capability skills, Diane believes, and it’s important we introduce these concepts in primary school so students enter their secondary education with a good foundation and experience in spending, saving, credit, debt, and budgeting.

“The key to a healthier financial future is ‘little and long’,” says Diane. “And so in that sense, it never is too early to start saving small amounts of money. Most people don’t have big lump sums to put in a savings account. It’s just about starting small, and starting early.”

Diane says this is made clear from her experience working with people in their twenties who have extensive debt; for example, from credit card spending and high interest loans.

“Between the ages of 15 and 25, it’s possible to do quite a bit of damage. And some young people never really recover. And we wish we had managed to communicate some of these really important messages before they left school.”

Sorted schools cluster

A group of Auckland schools are doing just that, in an innovative pilot which runs over two years until December 2015.

Formed around Auckland’s Albany and Upper Harbour region, and overseen by the Commission for Financial Capability, the Upper Harbour Sorted Schools (UHSS) learning community comprises nine schools – including primary, intermediate, secondary.

The CFFC is supporting this school cluster to broaden the reach of financial education, and help them embed these skills across the entire curriculum.

Primarily, the UHSS is a learning community, where roughly 135 teachers – who directly impact around 3500 students – and 17 lead teachers can share ideas, as well as access professional development opportunities. This pilot programme is being continually evaluated, and a second Sorted Schools cluster of eight schools has been established in the South Auckland region.

Money doesn't grow on trees

Di Cavallo is deputy principal at Hobsonville Point Secondary School, while also acting as co-chair for the advisory group to the UHSS learning community.

She believes that in our ever-changing world, financial skills are more important for students, and their families, than ever before. “There’s been a recognition that we’ve got to affect kids. The hope is that they’ll take some of their knowledge home to their families,” she says.

“There are lots of things that are challenging that I think we need to prepare students for. One is that money is becoming much more of an abstract concept. Money itself is changing, becoming more invisible.

“Money is changing as rapidly as everything else is, and so is our relationship to money.”

Target road primary's financial capability journey

Christine Templeton is deputy principal at Auckland’s Target Road Primary School, which is part of the Sorted Schools initiative. She says the aim at Target Road was to introduce and embed financial capability across the whole school.

“Initially, we had one lead teacher get involved with the project, and then we extended this to three teachers attending cluster meetings. We carried out staff PD, where teachers had opportunities to brainstorm ideas as to how it could be integrated into our school inquiry programme.”

The UHSS objective of collaborative learning and extending learning to the linked community was fulfilled at Target Road.

“Being a part of the cluster has facilitated the learning of the lead teachers where resources and ideas were shared. Each school across the cluster shared a presentation and many ideas were shared across other schools from these. Alongside this collaborations, we will also have a cross-cluster Money Day during Money Week, where many other schools will be involved.

“Parents and the community were involved in the Market Day learning. We also include little money snippets in our newsletters that go home. We had a parent night with speakers, too, and are looking at other ways to involve parents in our financial capability learning.”

Christine says Target Road teachers became so enthused, it was eventually decided to hold a whole-term financial capability inquiry project across the entire school.

Pre-learning interviews were done in some classes (new entrants and Level 3), and these revealed a poor understanding of money and saving. Every class selected different outcomes and adapted the inquiry learning according to the needs of their students.

“Students became highly motivated and were talking about money at home, too. The culminating task was to budget, buy, make and sell products at our school Market Day. Did we make a profit? Or did we make a loss. Why? Why not? We held this on Christmas Carol Night and it was a huge success. It was also a way of sharing our outcomes with the community as student engagement was so high.

“Are learners better off? Absolutely! Now we need to keep this momentum going!”

Financial capability at Browns Bay school

Students in classroom

Browns Bay School principal Peter Mulcahy says that being part of the Sorted Schools cluster has reinforced for him the fact that financial capability is a life-long skill.

In the past, the school had taught money handling skills as part of maths and measurement, but, he says, this was always in isolation to financial capability as a broader concept.

“It wasn’t really so much about the skill of managing your money, but rather counting and adding and subtracting amounts,” he says. In addition, Peter feels that tackling financial matters at school has given teachers food for thought about their own financial skills, and how they talk about money.

“We had a really interesting staff meeting, where we talked honestly about our own thoughts about money. It was quite amazing to hear other peoples’ stories and advice on the subject, and I think it’s really valuable to share our experience like that.”

Especially interesting, says Peter, is learning about saving, investment, and how our modern lifestyles are changing the way we prepare for retirement.

“Because we’re living longer, house prices are all over the place, and there are scams we need to be wary of, talking about these issues is more important than ever,” he says.

With the help of the financial capability Learning Progressions resource, Peter says the Sorted Schools initiative has been woven through all the students’ learning.

“Dropping down to the students, we’re feeding it in, so that money is no longer an isolated concept; it is more spread across different curriculum topics, and into events that are happening across the school.

For example, our gifted and talented teacher recently ran a unit called ‘The Island’, which was all about developing and managing an imaginary holiday resort. The students had to set up budgets, advertising, and more. Other students were doing role play around budgeting and retail.

“We had a little trade fair at the school, and we discussed wider issues around trading, and making decisions about money, rather than purely adding and subtracting money.”

“There was another class who was studying travelling, and this was again focused on budgeting, and making good financial decisions, researching online, and planning activities within a budget. I’d just been overseas, and I shared with them my budget and how I made certain financial decisions.”

A shifting awareness at Torbay primary

At Torbay Primary School, staff and students have enthusiastically embraced the opportunity to participate in the Sorted Schools cluster.

Teacher Susan Ye says the junior school students have been learning about coin identification and understanding the cost of different items. Both Susan and fellow teacher Julie Tolsma believes there has been a shift in awareness within the school when it comes to financial matters.

“There’s been a shift in knowledge, with year twos now being more aware that money doesn’t sprout on trees or leap from the proverbial pot at the end of the rainbow,” says Julie. “The children talk about how money is generated in their household, and how far it has to spread.”

In the senior classes, students have been involved in various practical activities relating to financial decision-making, such as planning parties, budgeting with pocket money, and designing an economy from scratch, in the form of an island that produces food and pays its workers.

“It was interesting to see that the children had farmers being paid more than bankers, as they had the important job of producing food,” says Julie.

Julie says that all students have adopted the mantra: ‘wait for your wants, and speed to your needs’, encouraging each other to think twice before spending money on impulse items, and form good saving habits.

“The idea now is to broaden the discussions about money, and extend these to the dinner table at home. Children can share their new understanding of money with their whanau, which opens up opportunities for parents to share their knowledge or even be prompted to learn more themselves.

“We need to dismiss the old taboo that money shouldn’t be discussed.”

Celebrating money week in your school

Money Week 2015 takes place from 31 August until 6 September. This special week is set aside to encourage New Zealanders to get their finances into the best shape possible.

The primary goal of Money Week in schools is to promote intra and inter-school discussions about financial capability. Talking about financial matters in the classroom was the focus of an article ‘Setting up for security: talking about financial capability in New Zealand classrooms’ in Issue 94.13 of the Education Gazette.

Find more information about Money Week(external link) 

Test your financial pulse!

This Money Week, 2015, take part in the Test Your Financial Pulse survey and be in to win an iPad Mini or free enrolment in Money Smarts @ Work online course.

The Westpac-Massey Fin-Ed Centre invites you to participate in our survey – Test your Financial Pulse.

The survey is designed to assess your capacity to manage finances. The questionnaire includes questions on a range of different financially related topics including Spending, Credit and Debt and Saving and Investing. This questionnaire will help raise awareness of the areas where your finances are flourishing, as well as any areas that you may need assistance with.

Students who complete the questionnaire will go into the draw to win one of two mini iPads! Teachers who complete the questionnaire will go into the draw to win one of five free enrolments to ‘Money Smarts @ Work’ – an online course!

Please note that to be eligible for the prize you will need to be a Y11–13 student or a teacher of a participating secondary school. The relevant school will be notified of the winning participant/s.

Entries open(external link) 24 August and close 5pm, 1 September.

BY Melissa Wastney
Education Gazette | Tukutuku Kōrero, reporter@edgazette.govt.nz

Posted: 6:15 pm, 24 August 2015

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