Call to start financial education early in life

The earlier we start helping people to learn the language of money, the better we are all going to be, Richard Klipin says. Photo: Getty Images

On Tuesday, the Financial Services Council (FSC) released its latest Financial Resilience Index, which found people’s overall understanding of financial literacy had dropped by 8% on this time last year.

The index, launched by the FSC last year, surveyed 2000 New Zealanders’ views on five financial resilience indicators: confidence, literacy, preparedness, job security and wellbeing.

It found that 48% of people considered themselves financially literate, down from 56% in April last year, FSC’s chief executive Richard Klipin said.

Overall confidence in making financial decisions had also dropped about 7%, from 87.6% in April last year to 80.9% this year.

Mr Klipin believed both were "alarming" trends.

"You learn the lessons of money, either good or bad, around the kitchen table, around your family and you also learn it at school," he said.

"The earlier we start helping people to learn the language of money, the better we are all going to be."

Micro-investing tools were also a good way to engage people in the world of money, Mr Klipin said.

"It is not all doom and gloom, we are all pretty tech savvy and, with the rise of tools such as Sharesies and Hatch, there is a whole generation of people who can get educated and engaged in money issues because you can jump on an app or download an app on your phone.

"Those tools have been able to teach people to make or simulate an investment portfolio and invest money, make money and lose money," he said.

New Zealanders joined those micro-investing platforms "in their thousands" during last year’s lockdown, Mr Klipin said.

The index also found job security was slowly rising, up 0.6%.

This year, 78.7% of people felt secure in their current employment, against 78.1% last April.

Given the effect Covid-19 had on some sectors, the slight rise was great news, Mr Klipin said.

"Job security underpins people’s confidence because, if you feel good about your job, and you feel good about the longevity of your job and income, it means you are able to make good decisions around taking on debt, buying a house and investing wisely," he said.

The roll-on effect of the job security indicator was really important, he said.