By Angela Martin
‘No Poverty – end poverty in all its forms everywhere.’ This is a bold statement of intention outlined in the United Nations’ Sustainable Development Goals.
Given the current economic climate and increasing cost of living, is eradicating poverty achievable in Australia, let alone the rest of the world? The team at the Money Mentor program would like to think so. We support this ambitious goal of ending poverty both at home and internationally through providing financial literacy education to many demographics, from students to adults returning to work.
According to research published by the World Bank, financial literacy is critical to reducing poverty. Through financial literacy education we want to break the intergenerational cycle of poverty. What is financial literacy? It’s ‘the acquisition and use of knowledge and skills for effectively managing one’s financial resources and making informed financial decisions,’ Financial literacy is a significant factor affecting people’s ability to obtain financial services. Evaluating the relationship between financial literacy and relative poverty, is of great significance to poverty reduction.1
When focusing on the opportunity of financial education in Australia – and more specifically in Victoria – it is clear that this opportunity is significantly impacted by the socioeconomic status of an individual: where they live, the resources available to them and also the educational background, financial knowledge and commitment their families / communities have to invest in discussions about money at home.
These elements can collectively contribute to intergenerational poverty. For young people growing up in disadvantaged families or marginalised communities it is difficult to escape the cycle of poverty. “Family income is positively associated with financial literacy in young people, and youth financial literacy is, in turn, positively correlated to the amount of wealth they are able to accumulate in adulthood,” one 2019 study suggested.2
Having a good level of financial literacy from a young age can enable an individual to make informed choices about financial products and services which best suit them. This knowledge empowers them to make more educated, forward-thinking decisions and thereby pivoting away from riskier options.
The importance of financial education has been recognised and researched internationally with findings indicating that it promotes financial stability, economic development, individual empowerment and wellbeing. Improving financial literacy rates in developing countries through education can help create pathways out of poverty, improving the financial standing and economic stability of low-income individuals and communities.3
The improvement of financial literacy across the world will require participation from policymakers, stakeholders, organisations and other important figures. However, individuals, groups and organisations can make a profound difference in their community by building financial skills through the Money Mentor program, which offers resources, framework and tools to break out of the poverty cycle.
More information about the Money Mentor program’s purpose, content and impact can be found:
moneymentor.org.au
LinkedIn – Money Mentor program
Instagram – @moneymentorprogram
Further reading about financial literacy is available here
1 Connolly and Nicol 2015, p.1.
2 Zhu, Yu and Chou 2019
3 Connolly and Nicol 2015
