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Should financial education be compulsory in NZ schools?

A new survey from Massey University has revealed young New Zealanders are lacking knowledge in budgeting, saving and investing.

According to the Westpac Massey Fin-Ed Centre’s 2015 Student Financial Health Check, 16-19 year olds are failing to answer questions relating to these topics.

The survey of nearly 300 16 to 19-year-olds was developed in conjunction with high school teachers to test the competence levels of students across a range of personal finance areas.

The average score for questions relating to budgeting and financial management was only 37 (out of 100). The next lowest average score, at 45, was for saving and investing, the survey shows.

“These are two very crucial areas for young people to come to grips with if they are going to put themselves onto a path of financial wellbeing,” says Westpac Massey Fin-Ed Centre director Dr Pushpa Wood.

“If they don’t know how to budget well, they will not have money to save. And if they don’t understand how best to grow their savings, then that will have a long-term impact over their lifetimes,” Wood says.

Westpac NZ acting head of investments and insurance Nigel Jackson says the results underline Westpac’s long-held belief that financial education should be a compulsory subject in New Zealand schools.

“Every student should have a basic understanding of financial management by the time they leave school,” he says.

“It’s never too early to get in the habit of setting long-term financial goals and strong budget management through the student years can make a real difference after graduation.

“While we’d expect students to be less focused on saving and investing, simply having a KiwiSaver account for after graduation could play an important role in long-term financial security,” says Jackson.

The survey respondents scored best in the areas of identifying and managing risk and understanding their rights and responsibilities.

“It’s great that kids seem to understand their rights and that they are able to identify risks,” Wood says. “It seems that this age group is much less likely to fall victim to a scammer than our senior citizens.”

Wood says that she would rate young New Zealanders ‘a five out of 10’ for budgeting and saving.

“That’s what our survey is telling us – ideally it should be closer to seven or eight so they can have a good start to their adult life,” she says.

“An important stepping stone in achieving financial education is for families to start having conversations about money and budgeting for ‘wants’ at an early age,” Wood explains.

“The sooner we can engage our children in money conversations and help them understand the importance of a savings plan for their future, the better prepared they will be to make good decisions,” she says.

The Westpac Massey Fin-Ed Centre will launch a free online course for all new Massey University students at the start of the academic year. It will be divided into separate areas dedicated to those living at home, living on campus or flatting.

Summary of 2015 Student Health Check results

Topic area

Score out of 100

Budgeting and financial management

37.0

Saving and investing

45.0

Income and taxation

51.6

Spending

55.8

Setting financial goals and planning

56.1

Credit and debt

58.4

Money

59.0

Rights and responsibilities

64.9

Identifying and managing risk

65.6

 

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