When Fairley took out her student loan she got a document outlining the terms and conditions. "A 17-year-old is not going to read that," she says.
The reality of how difficult the money would be to pay back only hit her when she joined the workforce. She moved overseas at the end of university, which means the loan was clocking up interest. What's more, she didn't start making payments for five years, which resulted in a lot of compound interest.
"If I could go back now I would do things very differently. I would actively start to pay it back from day one."
Lynn Lai and fellow students at the University of Auckland saw friends around them doing exactly the same thing. So in 2008 they founded SavY, which provides free financial education to Year 13 students.
"A bunch of us saw our friends getting into debt and realised if they hadn't done a business programme in school they would not have been exposed to things like budgeting," says Lai.
The idea that they might have to allocate money to essential spending first isn't one that all school leavers have come across. The answer to them is to get another credit card or overdraft when ends don't meet.
Some of Lai's university pals were constantly moving the debt around and borrowing to cover borrowing, taking overdrafts to pay credit card debt, but not paying the balance off, which then compounds rapidly.
"A lot of times [young adults] are not even aware of the amount of interest credit cards and overdrafts incur," she says. "They say, 'Oh my god, it's 20 per cent, we didn't know'.
"I had a friend who believed she only had to pay the minimum balance and didn't realise she was still being charged interest."
The SavY facilitators find many students think of their student loans, credit cards, overdrafts and forms of credit such as hire purchase as "free money". "You can see a light bulb moment when they realise they will have to pay more if they use HP or a credit card instead of cash," she says.
Another issue is that students often don't think about the difference between student allowances, which don't need to be paid back, and loans for living costs.
Nor do they register the totality of what they're borrowing, even if they do get statements from StudyLink, banks and HP providers.
One big problem that school leavers have, says Lai, is understanding the concept of "me versus future me". "The future me is a very vague concept that can be dealt with later - that is, 'why should I delay gratification?'."
Lai's top tips for students are:
1. Plan to save.
2. Expect the unexpected and plan for future events. If you do, you are less likely to borrow.
3. Reduce spending on splurge items first and then necessary items second.
4. Budgeting is as simple as splitting your spending into three categories: regular necessary - such as topping up your phone; irregular necessary - Mum's birthday present; and splurge - video games, movies.
5. Pay off your closing balance, not your minimum balance, on your credit card.
6. Have a cooling off period before you make any financial decisions. "Think about why you need it and what you could afford later on if you had not spent that money," says Lai. "Impulse buying is the one sure way to burn your money fast. This is definitely something that needs practise and after a while you get used to it."
The "plan to save" tip both surprised and pleased me. It's hard for students to find spare cash during the term. But it's a good habit to get into and $5 here and $10 there soon adds up to a more secure future. Holiday savings can go a long way to lessening the ultimate student loan debt. It's also a way of setting up good habits, says Lai.
Lai said she worked up to 10 hours a week alongside her law and commerce degree. Some students work far longer hours than that and still manage to get their coursework done. Overseas studies have suggested students who work part-time do better academically than those who don't.
Families can help with more than cash. The coming of age phase is a letting go period for parents. Yet the children of families that keep a dialogue up around money and debt during these years tend to have better financial outcomes.
They need to know that the freedom of no longer being a child comes with responsibilities such as rent, course fees, cars and, of course, credit.
And the new generation is still grappling with the basics of how to manage a career, managing cash flow, saving and investing and being entrepreneurial. Just like the New Zealand Transport Agency's adverts that remind parents their teenage drivers are not fully competent when they first get their licence, young adults need advice on how to avoid crashing their bank accounts. The frontal lobes of their brain are not fully developed and parental advice and mentoring is still needed.
Have "the (other) talk". Raise discussions about debt and their financial future. Talk about choices. Buying simple food will be a lot cheaper than frozen meals or foodie ingredients. They may not understand that. And look out for signs that your offspring's finances are getting out of hand.
On a practical level one thing parents can do at this time is to get them started with a budget. Have discussions about what food costs, how much a jug of beer is, the cost of bought lunches versus homemade ones, text books, unexpected costs, and so on.
Give them a simple budget template. SavY's one is paper-based. This is probably the best thing to start with rather than a flash app such as Toshl or Goodbudget. The University of Auckland has a basic student budget spreadsheet at www.auckland.ac.nz/budget.
If you pay an allowance, ensure its use is budgeted and set up regular meetings to discuss how it is being spent. Subsidies need guidelines and accountability.
Parents should also encourage their offspring to talk to financially savvy friends about how they manage their money. There are students at university, as Lai and her colleagues demonstrate, who can manage their money well, and they are a good source of learning.
SavY, financed by the BNZ, has run free workshops in 30 schools in Auckland, Hamilton and Wellington. SavY's Year 13 seminars cover topics from what is money to financial decisions such as buying a car and flatting. The sessions are interactive and game-based to train students to survive on a budget.
