We’re living in a world of “cardless cash” and immediate mobile transfers — both of which probably meant very little to our grandparents when they were our age. We went from carrying cash or writing cheques, to being able to swipe a card and enter a pin, to now just tapping, or hovering over things with our smartphone to share funds.
As our means of spending and receiving finances continue to evolve, are we more disconnected than ever from the actual source: money?
Ever find yourself in the puzzling position of making a purchase at a retailer that only takes cold hard cash — “who even carries cash anymore?” — and realise that you can hardly recall the last time you had real money in your wallet? You’re not alone. In fact, Australians now only make cash purchases 37% of the time and mostly for less than $10 according to the Reserve Bank of Australia. Looks like the spare-change coffee fund is one of the only times we’re dealing with real dollars.
This doesn’t just affect the way we spend, it also impacts the way we save. And currently, Australians have some of the highest levels of personal debt in the world (thanks to our inflated property prices). When you’re trying to tap and go, the old ‘insufficient funds’ notification is no longer a real barrier, more a reminder that you’re about to cash in on something you’ll have to pay for later which makes it easier than ever to spend beyond zero.
When I was first introduced to the banking system – yep, in the 90s I went to a local branch with my mum to set up a Dollarmites account – every step required pens, paper, a signature, a statement, and real cash to really put somewhere safe. By the time I was old enough to actually start earning and managing my own money, none of these processes took place anymore – or at least, not to my convenience. I don’t even receive bank letters printed on paper. It’s. All. Digital.
In this new world of money floating around from virtual pocket to virtual pocket, it’s essential to be aware of how modern finance works. And not only for life admin purposes.
Financial literacy, including skills like budgeting, income, expenditure, profit, product pricing and sales planning, is one of the key skills employers are looking for from Australia’s young people according to our research. They’re even willing to pay more for employees with financial literacy skills – up to $5k more!
But the research also suggests that that 3 in 10 Australian 15 year olds demonstrated low proficiency in financial literacy. So how do we bulk up on our financial literacy skills?
There are plenty of resources to help you get money-minded. If you’re happily on the digital train, there are great budgeting apps available – but it will take some trial and error to find which one works for you. Most budget apps ask you three major questions: How much are you earning? What are your essential recurring costs (rent, phone plan etc.)? And how much do you want to save? Really, you don’t necessarily need an app to sort this out for you. Some simple math or an excel spreadsheet can help you get an idea of how much you can safely spend and expect to save.
Maybe a day (or a week, if you can manage it) with nothing but cash and coins would be a great way to remind yourself what a transaction actually feels like, and where your money is really going. You’ll be surprised how much less you want to part with it when you’re handing over the actual dollars each time you spend.
A great place to start is Khaan Academy’s Finance hub, with heaps of free resources and online courses for fine tuning your financial literacy. We’re also keen to see young people properly exposed to the future job skills they’re gonna need — we’re talking great work experience placements and immersive on-the-job learning.
If you want to start the conversation around these skills in the classroom, maybe showing your teacher this article is a great place to begin.