The financial pulse of the nation

Issue: Volume 95, Number 3

Posted: 22 February 2016
Reference #: 1H9cz3

A recent survey conducted by Massey University has further confirmed what previous research has more than hinted at: as a nation, we’ve got some way to go before we can call ourselves a financially literate population.

In this era of easy access to money and debt, young people about to strike out into the big blue financial yonder will feel the pinch of imprudence like never before. There’s good news too, though: young New Zealanders are adept at spotting a financial scam, and they’ve got a great grasp on their financial rights and responsibilities. So how do we best equip today’s students to become tomorrow’s money-savvy adults? While there’s still much debate as to how, there’s universal agreement that to do nothing is not an option. Education Gazette speaks to several experts.

Dr Pushpa Wood has behind her a lifetime in education – both in India and here in New Zealand – the majority of which she’s spent specialising in literacy, numeracy, and financial capability. She’s currently director of the Westpac Massey Financial Education and Research Centre (a partnership between Massey and Westpac), which came into being in 2011. Pushpa has recently led the latest iteration of the Financial Health Check survey of secondary-age students, which came from a similar initiative targeting Massey University students, she says.

“We were curious: we wanted to know, especially after the PISA results [Education Counts website(external link)] came out, what our year 11 and 13 students thought about financial matters. We developed the survey in collaboration with high school teachers, and we tried to ensure that the survey aligned to curriculum, and learning progressions in financial management."

“We were looking to gain an understanding of their knowledge, and we were looking at their behaviour. We wanted to know what financial practices young people were putting in place at that age. We wanted to know what their understanding of money is, and how it’s used. What is their understanding of credit and debit, their understanding of spending, saving and investing?"

“On a macro level, we looked at how these young people were able to identify and manage risk, and at their understanding of income and taxation, for example."

“Fundamentally, what we were also keen to know is whether they have a good understanding of saving for the future, and differentiating between needs and wants, and planning their spending rather than indulging in impulse buying.”

The Financial Health Check survey is only one node in a much larger scheme of work being undertaken by Pushpa’s team, and it’s a game-changing initiative: the umbrella encompassing the survey is a 20-year longitudinal study that will periodically gauge the understanding of personal financial issues as they evolve over the course of a large chunk of the subjects’ lifetimes. To Pushpa’s knowledge, Massey is only the second institution embarking on such an ambitious study, certainly at least within the OECD.

Pass mark?

So, from Pushpa’s point of view, what leaps out from the results of the Financial Health Check survey? She’s unequivocal in saying that while young people seem well versed in spotting an online fraudster a mile off, we’re not so great at keeping a lid on impulse spending.

“What leaps out for me is that in both years, we’re not doing very well in budgeting and financial management, in terms of both understanding and practice. Unless you understand, of course, you’re not likely to put prudence into practice."

“The other area that leaps out is of course saving and investing. We don’t seem to quite have a handle on these things just yet!"

“What is actually great though is that kids seem to understand their rights and responsibilities, and they’re also able to identify risks, which is really pleasing. So this age group is less likely, according to this survey, to fall into the hands of scammers, for example. By that we mean things like ‘loan sharks’, and also scammers from overseas trying to solicit money. Young people, as might be suspected, are much less likely to fall victim to this sort of danger than our senior citizens.”

Paul Newsom of the Young Enterprise Trust, an organisation that promotes financial education and enterprise, agrees with Pushpa’s assessment of financial smarts among young people. His overall grade, if he were a teacher writing a report, would be something like ‘insufficiently prepared’. He believes too that the minority of young people who will leave school well-equipped to live their financial lives with prudence get that way because of the environment they go home to. This state of affairs is causing those with a finger on the nation’s pulse grave concern, says Paul.

“I think it’s a matter of national concern. I think that the implications and consequences of poor financial decision making can be so much more far reaching now than they might have been a couple of generations ago."

“I think this is because the responsibility for the management of money has been shifted somewhat from the government to the individual. When I was a kid, for example, the state pension provided for my parents and their future. In a lot of other countries, similar to New Zealand today, the onus has shifted more onto the individual. I think this is a good thing, provided that people have the knowledge, the capability, the behaviour, and the discipline to do what they need to do for their futures."

“Another example would be tertiary education. When I went to university in the UK, and I understand it was the same here, it didn’t cost me or my parents a cent. It’s a hugely different world these days of course. Student debt is escalating worryingly, and the number of students in tertiary education is declining. That’s just a couple of examples of how the world’s changed, and obviously money is so much easier to borrow and access now than it was before.”


What then do we, as a nation, do to correct this situation? How did we get here? What deficits are to blame? Paul believes that it’s not ignorance holding us back, but that we’re not collectively putting our hands up.

“There are plenty of resources and information out there. That’s not, I believe, the problem. I think that there are a couple of things that have to happen. Firstly, we have to agree as a nation whose job it is to teach young people about financial capability. It’s a discussion that I believe hasn’t been undertaken with sufficient urgency or impetus for significant leadership on the matter to emerge. Secondly, I think that schools have a responsibility to include financial capability in their curriculum."

“I think that we have a generation of parents who aren’t as capable as they could be in financial literacy. When they were kids, going through their teens and the early part of their working life, parents of school-age children today wouldn’t have had to make the sorts of choices and decisions that kids are now when they’re leaving school. That leaves them in a difficult position in terms of passing on financial prudence to their children.

“The starting point, I think, is to build the capability and confidence of teachers to be able to use the plethora of resources that are out there.”

Pushpa has her own take on the issue, but, similarly to Paul’s perspective, she believes that we need to start by getting the matter out in the open.

“In terms of budgeting and saving, on a scale of one to 10, I would put young New Zealanders at about a five. That’s what our survey is telling us. I would like to see them at a seven, and quickly!"

“I have my own views as to why we find ourselves in this situation. One reason I believe is that the conversation about money is not happening at home. Unless it starts from the very beginning – such as ‘no, darling, you cannot have this today, because we do not have it in the budget, but we will put it in the budget and we will look at it next week’ – that type of conversation, that delayed gratification notion, needs to be talked about from the very beginning."

“If we’re giving pocket money to children, we’re not using that as a learning opportunity to say ‘ok, what are you going to use it for? How much are you going to put into savings?’ So introducing that notion of putting aside, even if it is 50 cents, it’s something."

“I believe that, complicating the matter further, money has become invisible. Our children, especially those being brought up now, do not really have much experience in actually handling real money, because parents don’t handle real money. I regularly run into six- and seven-year-old children who think that money comes from the machine in the wall. Mummy goes there and gets it."

“They never see the inputs, they just see money coming out of the wall, or Mummy handing over the plastic card and walking away with whatever she needs.”

Pushpa’s cherished dream is for schools and parents to work harmoniously together in teaching their kids about money. She certainly doesn’t believe – and Paul Newsom agrees – that teachers should be lined up against a wall because kids don’t understand the ins and outs of money.

“It should become a two-way process, so teachers aren’t struggling to do everything. Sometimes I feel quite sorry for teachers, they are expected to do everything nowadays. We want them to be expert in everything, and I feel that parents need to take more responsibility in this sense, and actively seek to increase their knowledge. Simply saying ‘I’m no good with money’ doesn’t wash well with me I’m afraid!”

Education Gazette asks whether busy parents struggle to assimilate all the available information because it’s so fragmentary, and most of it isn’t addressed to them and their desire to instil financial prudence in their children. What about a single resource, a ‘Parents’ Pack’, that can help parents develop the confidence in their own knowledge such that they can pass it on? Pushpa says that if the idea gets buy-in, she’ll be on it like a shot.

“I tell you what, I will make you a personal promise: if parents promise to read it, I would be more than happy to prepare it!”

Robust debate

“When they connected the learning in this way, students improved their financial capability. If we can build up those capabilities, young people are more likely to make more informed decisions later in life – not necessarily good or bad decisions, but more informed decisions.”

What Angela is saying is that we need to give kids more opportunities to practice financial prudence. We give them ample opportunities to practice the ball sport of their choice, and we would consider it a waste of time to try to develop a sporting team by theoretically modelling such a physical skill, rather than throwing them a ball and letting them get a feel for it: why then do we expect kids to become switched-on managers of their own finances over the course of a lifetime by modelling an abstract scenario?

“Young people at age 15 generally don’t have a lot of income. They don’t have huge expenses, so they don’t have to make complex decisions. It follows then that we have to find more ways to involve kids in the actual mechanics of money, in contexts that mean something to them."

“Maybe kids should be given more control – under supervision of course, – of the money that their parents spend on them: so they’re given the same budget to work with that their parents spend on them, on things like shoes, food, their share of electricity, and they’re encouraged to parse that budget to cover the things they need."

“Because we’re human, we’re inclined to want things now. We’re really not very good at putting stuff off, and delaying our wants over our needs."

“In other words, we’re not very good at believing that the future is a real, tangible thing!”

Financial Capability in the New Zealand Curriculum

The New Zealand Curriculum framework of values, key competencies, principles and learning areas permits schools to explore rich learning opportunities for topics such as financial capability in a way that meets the needs and interests of their students. The curriculum encourages schools to make links between learning areas, including developing students’ financial capability, “positioning them to make well-informed financial decisions throughout their lives”.

What one piece of financial advice would you give to young people?

We asked Paul Newsom of the Young Enterprise Trust to ask around the office…

"Always pay off your credit card in full. Why would you give your money away? If you kept $1,000 outstanding balance on your credit card, that’s like giving your bank a pair of very nice shoes. Or a couple of dinners out. Or a couple of Grabaseat flights.”

“Check out YNAB budgeting software. It’s been a complete game-changer for me and I wish it had been around when I left school.“

“Think big – a lot of young people think investments or strategies to create wealth are for other people – older, smarter, richer, etc. Learn about investment now – it’s for everyone.“

“Always put away 10 per cent of everything you earn into a special savings account (or five per cent if you aren’t earning much – I do 10 per cent because it’s really easy to calculate!). Move the money as soon as it arrives in your bank account, before you can think about all the stuff you wish you could spend it on! Move 10 per cent of all the gift money you are given, too. That will become your emergency fund – for paying for things like rental bonds, unforeseen medical costs or emergency travel costs. Mine is called my DO NOT TOUCH account, so I remember never to go near it!”

“As an individual, reviewing your financial situation annually is just as important as when a company does it – in fact, more so. Every year, you should conduct a process to ensure that you eliminate your debts where possible, secure where possible the lowest interest rates on any debts you do have and maximise the returns on your investments and savings. Shop around, get the best deals for you – treat your personal finances like a well-run business.“

“My advice would be if they get a parking ticket or speed camera fine, to pay it as soon as possible, before it goes to court and has penalties added, as the debt mounts up quickly and becomes unmanageable – just like any other type of interest. A $12 parking fine can end up costing them hundreds and an $80 speed camera ticket can end up costing thousands.“

“Pay off your highest interest loan or debt first. Throw everything at it until it’s gone. Then move on to the next one.“

Teach students to be financially capable from years 1 to 13

If you want to know how and what to teach to ensure the students at your school learn financial competency, excellent resources and professional development can help you integrate this essential life skill into your teaching and learning.

Ongoing, cost -free support is available to help schools integrate financial literacy/capability as an authentic aspect of teaching and learning in all curriculum areas.

Facilitators are available to provide the following, at no cost to schools:

  • area-wide workshops (see below for details)
  • whole-day workshops for clusters of schools in your area or individual schools
  • half-day workshops for clusters of schools in your area or individual schools
  • one-off or a series of staff meetings
  • syndicate meetings
  • ongoing support custom designed to meet school needs
  • principal cluster group presentations
  • BOT presentations.

Since attending financial capability professional development, schools have employed strategies ranging from:

  • one-off topical lessons
  • needs-based mini units
  • whole-term financial capability units in authentic contexts
  • integrating the financial capability learning progressions into units as varied as Planet Earth and Beyond, the arts and a social sciences unit on exploration.

Professional development offered by the facilitators also includes ways to develop and extend partnerships with your school families and wider community through reciprocal learning around financial capability.

If you want to know more contact:

  • Janine Mackay (for any other North Island regional workshop). Institute of Professional Learning, University of Waikato,, 022 066 3034,
  • Cognition Education,, 0274 309 663. Dallas Graham (for a regional workshop for your particular area of Auckland/Northland).
  • Rosemary Smith (area south of Timaru), University of Otago,, 03 479 4201
  • Lois Hawthorne (rest of the South Island), University of Canterbury,, 03 367 0784.

Term 1 workshops:

  • Northland – 17 March – venue to be confirmed
  • Hamilton – 7 April – venue to be confirmed
  • Wider Auckland – 21 April (school holidays) – venue – Cognition Education, Mt Eden
  • Wellington – 21 July (school holidays) venue to be confirmed.

Workshops later in the year, including South Island workshops, will be advertised in future issues of the Education Gazette in the PLD section. Email/call one of the contacts above for more information.

BY Education Gazette editors
Education Gazette | Tukutuku Kōrero,

Posted: 8:25 pm, 22 February 2016

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