Financial Literacy and Culture

December 16, 2021
Avril Liljekvist

Financial literacy is often defined as the capacity to understand various financial tools and having the skills to use those tools effectively. Things like personal financial management, budgeting, investing, understanding the impact of interest rates and inflation all fall under the broad umbrella of financial literacy. We can see how not having an understanding of these concepts, or the confidence to use them effectively can lead to negative consequences such as bankruptcy, overwhelming consumer debt, or even just an inability to act in our own best interests when it comes to managing our superannuation.

Financial literacy as a term, however, assumes that we're all speaking the same language. The 2016 census counted more than 300 languages spoken in Australian homes, so why do we assume that financial literacy concepts are universal when language and culture clearly are not?

Concepts and Contexts

The way in which Australia's financial systems operate relies on certain assumptions about family relationships and the use of assets and income. When considering welfare payments and taxation, for example, only certain types of relationships are considered to involve asset and income sharing. Two siblings living together would be treated as separate individuals regardless of whether they shared their resources, for example, but an unrelated man and woman living together might be assumed to be sharing resources and have to demonstrate otherwise.  For superannuation, only certain individuals within the framework of the nuclear family are considered valid dependants for nominations.

Indigenous Australians operate within extensive family networks, the significance of which are not often recognised by the financial systems in which we operate.  “Aboriginal identity entails having a family to belong to, with a concomitant movement of money, goods and services utilised to sustain familial relations” (1) but those principles aren't recognised in a culture which prioritises the nuclear family above other familial connections. While resource sharing between a couple might be taken into consideration for taxation purposes, there is no extension of that sharing relationship to other individuals within a kinship network.

This disconnect between family relationships also extends to migrant communities within Australia who may have multi-generational roles of caregiving responsibilities. This places an additional burden of self-education on these groups, as they have to be able to work around the assumptions of these financial systems to make them work for their culture and circumstances.

Financial Literacy is Not Value Neutral

Although financial literacy is often presented as 'value neutral', it is firmly grounded within specific ideas about what is moral or ethical. Strategies for tax minimisation might seem straight forward and legal, but the extent to which they are considered moral differs greatly between different cultures. For many Muslims, consideration of whether an investment is compliant with Shariah principles might be an important factor in choosing that particular strategy. We cannot assume that everyone has the same needs or priorities when it comes to learning about financial matters.

In addition, even the idea of personal wealth can be problematic within some cultures. Research indicated that one barrier to individual financial empowerment for some Maori people was that their perception of wealth prohibited them from personally accumulating it for themselves (2). Aboriginal people might feel that putting their own financial needs above their family and community is opposed to their culture. (1)  Financial education should be compatible with culture rather than in conflict with it.

Financial Education Must be Relevant

As culture plays such an important role in our values and the structure of our lives and relationships, we cannot afford to omit it from something as broad as financial literacy. More importantly, we shouldn't place the burden of responsibility for personal wealth on individuals without considering the ways in which culture determines our engagement with financial literacy concepts. The opportunity exists to create meaningful and coherent financial education which doesn't require us to abandon who we are.

* The information provided in this article is general information only and does not take into account your objectives, financial situation or needs. Before making a financial decision, please assess the appropriateness of the information to your individual circumstances and consider seeking professional advice.

1.      Brimble, Mark, and Levon Blue. “Tailored Financial Literacy Education: An Indigenous Perspective.” Journal of financial services marketing 18.3 (2013): 207–219.

2.      Sue Yong, and Fiona Martin. “Tax Compliance and Cultural Values: The Impact of ‘Individualism and Collectivism’ on the Behaviour of New Zealand Small Business Owners.” Australian Tax Forum, vol. 31, no. 2, Apr. 2016, pp. 289–320.

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