Earlier this year, the Ontario government announced a new financial literacy component for students as part of Grade 10 math, starting in 2025 — part of a larger suite of educational reforms.
The province says students will “be required to score 70 per cent or higher to meet the financial literacy graduation requirement,” with their “first attempt to be taken during their Grade 10 math course.” Like the Ontario Secondary School Literacy Test — the only other standardized assessment students must write to graduate with a diploma — those who fail will get another attempt.
Financial literacy is widely considered a necessary life skill. But tying it to a pass/fail graduation requirement is counterproductive. Given that the goal of financial literacy education is to further financial well-being, it is bad policy to implement this in a way that could negatively affect students’ ability to graduate and, in turn, their future earning power.
To be ready for a 2025 launch, the province should start envisioning how this content can be meaningfully and effectively integrated into Grade 10.
Decreasing risks of financial crisis
Ontario presented the financial literacy requirement to help students “save for a home” and “invest wisely,” and as part of a “back-to-basics” agenda. This agenda emphasizes a renewed focus on math and reading, both of which are correlated with financial literacy scores on international tests of student achievement.
The Organization for Economic Co-operation and Development defines financial literacy as “a set of awareness, knowledge, skills, attitudes and behaviours that enable individuals to make informed and smart financial decisions.” Financial literacy requires both knowledge of basic financial concepts, including inflation and compound interest, and habits that improve financial well-being — such as budgeting and saving.
Canada’s national financial literacy strategy acknowledges financial literacy alone does not predict a person’s financial well-being. But it can help to decrease a person’s risk of financial crisis. Decreasing this risk benefits individuals, families and the economy. However, bundling in financial literacy with high-stakes testing is not a wise approach.
Problem with high-stakes testing
The standardized literacy test students write in Ontario has come under fire for its high-stakes nature, with serious personal and social consequences for those who fail. Failing the literacy test harms students’ self-esteem, which is associated with higher rates of dropping out and greater difficulty obtaining employment in adulthood.
Historically, the vast majority of students who fail are those “streamed” into applied level courses. Ontario is in the process of moving away from streaming, given its disproportionate and discriminatory effect on Black, Indigenous and low-income students, and those with disabilities.
It has also been criticized for testing students’ English language proficiency rather than literacy, calling the validity of the results into question.
Effective financial literacy education
There is some evidence that financial literacy education incorporated into school curriculum can improve financial literacy and that teachers and students support doing so. Unfortunately, there is a dearth of research on how best to do it.
Based on what we do know, we offer the following back-to-school “wish list” for effective financial literacy education.
1. Support financial literacy without a high-stakes test. Instead of introducing another standardized assessment, the government should consider a portfolio requirement where students compile and showcase their work related to financial literacy across subjects. Portfolios are an alternative to standardized tests that enable teachers to give feedback on an ongoing basis and tailor their instruction based on student progress.
2. Incorporate financial literacy education beyond math class. Financial literacy education tends to focus on individual responsibility, but social factors beyond our personal control also affect our financial well-being. It is important that financial literacy education materials recognize this reality.
Ontario provides a framework for this with resource documents related to financial literacy for grades 4-8 and 9-12, which make explicit connections across the social sciences and humanities. For example, in Grade 4 social studies, students explore the relationship between the natural environment and industry in different Canadian provinces, and discuss how one’s geographic locale affects their access to employment, housing and overall quality of life. But these financial literacy documents must be updated so their content is consistent with the most current versions of school curriculum.
3. Revamp the secondary math curriculum using concepts from existing courses. Though somewhat outdated, grades 11 and 12 college and workplace preparation math courses cover personal finance topics, such as mortgages and income taxes. The university-track math courses don’t have similar “strands” that teachers are explicitly directed to cover. An updated curriculum should draw on the strengths of existing math courses.
4. Provide teachers with materials that take students’ diverse lived experiences into account. Traditional financial literacy education materials tend to presume a middle-class background. This means they might encourage or promote financial behaviours and products that are impractical for families living on a lower income. More work is needed to develop materials appropriate for socio-economically diverse classrooms.
5. Provide teachers with easy access to teaching materials. Today, most teachers access teaching materials for their classrooms online. Therefore, it’s crucial that teachers have free, online access to unbiased financial education teaching materials. The Canadian Financial Literacy Database, managed by the Financial Consumer Agency of Canada, is one potential source the province could promote to teachers. Although it includes materials from financial industry sources, which are likely to emphasize individual responsibility over social factors, promotional sales materials are excluded.
6. Provide teachers with up-to-date materials. If updated and digitized in a similar manner to the grades 1-9 math curriculum, existing curriculum resources related to financial literacy have the potential to help teachers consistently embed financial literacy concepts in their instruction.
Technological innovation in financial services and products is changing the way we buy, save and invest. Financial literacy curricula and teaching materials must be updated regularly to keep up with technological developments. As recognized in Canada’s national strategy, digital literacy is also an increasingly important component of financial literacy.
Financial literacy is not a magic bullet that will solve the housing crisis or ensure everyone has enough money for retirement. But done thoughtfully, it can help improve financial outcomes.
Alexandra Minuk, PhD Candidate, Faculty of Education, Queen's University, Ontario and Gail Henderson, Associate Professor in the Faculty of Law, Queen's University, Ontario
This article is republished from The Conversation under a Creative Commons license. Read the original article.