Worried about the demise of Dollarmites? Don’t be.
But let me back up a little and explain what’s happened.
At the end of last year, the corporate watchdog, ASIC, released a much-anticipated report into school banking programs and their benefit or otherwise to children.
The findings were scathing. Not just did it say programs were of “limited value” to our little ones, it concluded that they exposed “vulnerable consumers” to sophisticated marketing techniques.
Interestingly, it also found participation in such schemes did not establish a lasting savings habit. Not exactly the point!
Indeed, one of the biggest players, Bendigo Bank, ceased its school banking program in anticipation of the ASIC report. Dollarmites operator CBA had vowed to work with the regulator to make its program of more value to kids.
But the situation is rapidly unravelling.
What is the latest development?
Dollarmites’ contract will not be renewed when it expires in July.
Don’t forget that, quite aside from ASIC’s recent adjudication, reporting by the ABC had previously revealed the extent of the kickbacks CBA pays for access to our kids.
In 2017, schools and Parents & Friends associations received some $400,000 due to children opening accounts and depositing money in them.
Meanwhile, reporting by Nine Media had also blown the lid on CBA staff fraudulently activating kids accounts by depositing their loose ‘change’ into them, to earn generous bonuses.
That’s all a function of the fact that CBA used to be a government-owned institution and its work educating children was appropriate. It is now a 100 percent commercial entity. And our schools should not be its lucrative customer-acquisition funnel.
What’s more, research by consumer advocate Choice has revealed that 46 percent of people open their first bank account with CBA. One-in-three still have that account.
And that’s why banks bother to ‘educate’ future adults.
So with the demise of Dollarmites after more than 80 years now almost certain, who steps up to set up our kids for success?
Independent financial literacy in schools
Unbeknownst to many parents, lessons in money smarts have been embedded into the Australian school curriculum for more than five years now.
Your children will likely never come home and say, “Hey, we studied financial literacy today”, but interlaced into subjects like maths, commerce, and even English and science, will be this content.
And it’s working. The OECD benchmark of a country’s performance, the Programme for International Student Assessment (PISA), evaluates the financial literacy of 15-year-olds from 15 countries.
On their ability to understand and apply their knowledge to financial questions, Australia most recently ranked equal-fifth. And that result was better than the previous test.
But while 15 percent of Australian students were high performers, a larger 20 percent were low performers.
And that just goes to prove that parents are always going to have to step up.
Three crucial lessons parents need to impart
The three vital money messages to show and tell your kids are these:
Lesson 1: In real life, money is earned not bestowed... and so it should be with pocket money (I like to match the ‘bucks’ to the birthdays between ages 6 and 11; a little higher income may then be required, until your child gets a part-time job at 14 and three quarters.
Lesson 2: Even though you seldom see physical money anymore, it still runs out. You have to allocate and spend it carefully.
Lesson 3: Good things come to those who wait. The ability to delay gratification – and target your most precious goals – is life changing.