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<h2><span data-contrast="auto">Financial literacy is defined as having a set of skills, knowledge and behaviours that ensure an individual can make informed decisions about money. </span></h2>
<p><span data-contrast="auto">It’s a term that’s often used interchangeably with financial education, which can be defined as an educational programme aimed at improving a person or population’s financial literacy. </span><span data-ccp-props="{}"> </span></p>
<p><span data-contrast="auto">In a </span><a href="https://www.schoolnews.co.nz/2025/05/what-is-the-government-funding-pre-budget-education-investment-roundup/" target="_blank"><span data-contrast="none">prebudget announcement</span></a><span data-contrast="auto">, Minister for Education Erica Stanford revealed that financial education will soon be mandatory for children as young as five in the refreshed social studies curriculum. </span><span data-ccp-props="{}"> </span></p>
<p><a href="https://www.schoolnews.co.nz/latest-print-issue/" target="_blank" rel="noopener"><b>Read the latest print edition of <em>School News</em> online HERE.</b></a></p>
<p><span data-contrast="auto">Ms Stanford was joined for the announcement by Minister for Finance Nicola Willis and Minister for Commerce and Consumer Affairs, Scott Simpson. Mr Simpson oversees the Retirement Commission, which will work in partnership with the Ministry for Education to align financial education resources to the new curriculum. </span><span data-ccp-props="{}"> </span></p>
<p><span data-contrast="auto">Ms Stanford said that many parents and whānau wanted financial education in schools. All three ministers stated that a financial literacy programme would not only improve individual outcomes, but the future economic outlook for the whole country. </span><span data-ccp-props="{}"> </span></p>
<p><span data-contrast="auto">So how financially literate is New Zealand, as a nation, and will financial education really raise financial literacy and help the economy? </span><span data-ccp-props="{}"> </span></p>
<figure id="attachment_33665" aria-describedby="caption-attachment-33665" style="width: 300px" class="wp-caption aligncenter"><img class="wp-image-33665 size-medium" src="https://www.schoolnews.co.nz/wp-content/uploads/2025/05/Maori-and-Neil-Waltham-300x225.jpg" alt="" width="300" height="225" /><figcaption id="caption-attachment-33665" class="wp-caption-text">Young people receiving financial education through the online programme MoneyTime. Image: Supplied.</figcaption></figure>
<h3><b><span data-contrast="auto">How financially literate are we?</span></b><span data-contrast="auto"> </span><span data-ccp-props="{}"> </span></h3>
<p><span data-contrast="auto">In 2020, the </span><a href="https://assets.retirement.govt.nz/public/Uploads/Research/CFFC-Barometer-Financial-Literacy-2020.pdf" target="_blank"><span data-contrast="none">Commission for Financial Capability (CFC) released a report</span></a><span data-contrast="auto"> titled</span><i><span data-contrast="auto"> Financial knowledge of New Zealanders</span></i><span data-contrast="auto">, which surveyed Kiwis using the OECD-INFE measure of financial knowledge. </span><span data-ccp-props="{}"> </span></p>
<p><span data-contrast="auto">Around 66 percent of New Zealanders met the minimum score to be defined as a “financially knowledgeable person”. Young people were the least financially knowledgeable, with only half of 18-to-34 year olds meeting the minimum score.</span><span data-ccp-props="{}"> </span></p>
<p><span data-contrast="auto">The report found that New Zealanders understood inflation, interest, risk and return but struggle to understand compound interest, risk diversification and the time value of money. </span><span data-ccp-props="{}"> </span></p>
<p><span data-contrast="auto">Māori and Pacific people were less likely to understand compound interest compared to the general population. </span><span data-ccp-props="{}"> </span></p>
<p><span data-contrast="auto">The report also found a correlation between understanding compound interest and saving on a regular basis.</span><span data-ccp-props="{}"> </span></p>
<h3><b><span data-contrast="auto">The need for financial education</span></b><span data-contrast="auto"> </span><span data-ccp-props="{}"> </span></h3>
<p><span data-contrast="auto">The CFC report states that although financial literacy may not change financial behaviour, financial knowledge is crucial for financial capability. It showed that financial knowledge was correlated with financially capable behaviours, like saving and borrowing. Additionally, without financial knowledge, individuals are at higher risk of financial hardship, or exacerbating existing financial hardship. </span></p>
<figure id="attachment_33664" aria-describedby="caption-attachment-33664" style="width: 271px" class="wp-caption alignleft"><img class="size-medium wp-image-33664" src="https://www.schoolnews.co.nz/wp-content/uploads/2025/05/Neil-Edmond-Portrait-271x300.jpg" alt="" width="271" height="300" /><figcaption id="caption-attachment-33664" class="wp-caption-text">CEO of MoneyTime, Neil Edmond. Image: Supplied.</figcaption></figure>
<p><span data-contrast="auto">Neil Edmond, CEO of MoneyTime – an online financial literacy programme for 10-to-15 year olds in Australasia – agreed with the ministers that a financial literacy education was crucial for young people. </span><span data-ccp-props="{}"> </span></p>
<p><span data-contrast="auto">&#8220;Life outcomes are largely determined by people’s decisions around money. Money affects every single person on the planet. Knowing how to make good financial decisions is a critical part of living a successful life.”</span><span data-ccp-props="{}"> </span></p>
<p><span data-contrast="auto">Mr Edmond notes that a financial literacy education is particularly important now, in our challenging financial climate. </span><span data-ccp-props="{}"> </span></p>
<p><span data-contrast="auto">In addition to things like earning, saving and budgeting, Mr Edmond thinks it’s important to introduce young people to property finance. He acknowledges that it is becoming more challenging to buy property, and it is increasingly difficult for young New Zealanders. But he says a financial education can help make home ownership a reality, such as teaching young people about co-owning. </span><span data-ccp-props="{}"> </span></p>
<blockquote>
<p><span data-contrast="auto">“It would be neglect on our behalf, as parents and as educators, not to be teaching kids [financial literacy] because the sooner they understand how important this is, the sooner they more likely to take positive action.”</span><span data-ccp-props="{}"> </span></p>
</blockquote>
<p><span data-contrast="auto">Teaching financial literacy may also be one way to improve economic outcomes of the future for all of New Zealand. Like many other OECD countries, New Zealand has an ageing population. This comes with several challenges, such as building a comfortable retirement. For most New Zealanders, superannuation will not be enough. </span><a href="https://www.rnz.co.nz/news/on-the-inside/562092/kiwisaver-at-a-crossroads-budget-another-missed-opportunity-to-fix-nz-s-underperforming-retirement-scheme" target="_blank"><span data-contrast="none">Kiwisaver is one scheme designed to address this issue</span></a><span data-contrast="auto">, and Mr Edmond notes that Kiwisaver is one of the best savings schemes available for Kiwis. However, it is widely agreed that Kiwisaver is underutilised. </span><span data-ccp-props="{}"> </span></p>
<p><span data-contrast="auto">The Retirement Commission’s involvement with the new financial literacy curriculum hints that improving financial literacy may be one policy tool for tackling future fiscal issues associated with an aging population. </span><span data-ccp-props="{";134233117";:false,";134233118";:false,";201341983";:0,";335551550";:1,";335551620";:1,";335559685";:0,";335559737";:0,";335559738";:0,";335559739";:160,";335559740";:279}"> </span></p>
<p><span data-contrast="auto">Mr Edmond also believes that teaching financial literacy will lead to better outcomes for the wider economy in other ways. </span><span data-ccp-props="{}"> </span></p>
<p><span data-contrast="auto">&#8220;It’s [financial education] around the effective and efficient use of money to create wealth.</span><span data-ccp-props="{}"> </span></p>
<p><span data-contrast="auto">“More wealthy individuals tend to create more wealthy communities, and more wealthy communities tend to create more wealthy countries.”</span><span data-ccp-props="{}"> </span></p>

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