Improving financial know-how

Diana Crossan wants greater financial literacy for all Kiwis. Photo / APN

The Retirement Commission is not giving up on getting personal financial management taught in schools.

It's been dear to the heart of Retirement Commissioner Diana Crossan for close to a decade, as the commission searches for ways to address this country's low rate of financial literacy.

After years of research, the commission, with the financial services industry, developed a curriculum for teaching basic financial management skills in schools in 2005.

In 2008, the banks funded a pilot programme for children in years 1 to 10. At the same time, the commission was working with the New Zealand Qualifications Authority to develop unit standards in financial literacy for secondary schools.

But the ultimate aim was always to have the education sector take over the implemention of the programme, Crossan said.

It took time to convince educators that financial skills should be included in the curriculum. "They were apathetic at the beginning, slightly hostile, and then moved to understanding we were talking about a fairly basic human need.

"The finance world was struggling to understand why the education world hadn't come on board."

By 2009, the Ministry of Education had agreed to pick up the programme but the global financial crisis intervened and, facing severe budget cuts, the ministry had no funds to promote the curriculum material to schools.

"We have a programme that could be rolled out, that was ready to be rolled out and there's no money to roll it out," Crossan said.

Although the ministry has highlighted financial capability as a skill for the 21st century, it is not compulsory to teach it. The commission is continuing to talk to principals and trustee associations to encourage schools to take it up.

The commission's senior education adviser, Pushpa Wood, said it aimed to raise awareness of the available resources and how financial literacy could be incorporated into existing programmes, such as social studies or maths.

Literacy and numeracy were not attractive subjects for young people "but making the most of your money or managing your finances, is more sexy".

About 50 secondary schools were teaching some of the seven NCEA unit standards, covering budgeting, setting goals, how to read financial documents, dealing with banks and understanding tax.

Some primary schools had also integrated elements into their curriculum, Wood said.

Papatoetoe High School has been teaching the unit standards for several years. Year 11 students spent two periods a week for half of the year studying things such as budgeting, the pitfalls of credit and how to operate a bank account, principal Peter Gill said.

The school felt that was the appropriate age to start instilling basic financial knowledge. "Many young people don't get that sort of information or get involved with those skills at all until it's too late."

Wayne Besant, CEO of insurance company AIA, said the financial services industry had an obligation to do more to promote financial education. This included simplifying its products, processes and the language it used.

Kiwis' take-up of insurance was half the OECD average and he put this down to lack of financial literacy. The problem was not confined to lower socio-economic groups.

"The finance company collapses show that New Zealanders don't have a good grasp of risk and reward and those sorts of things," he said.

AIA had signed a sponsorship deal with popular Maori TV programme Marae DIY. It hoped to develop the relationship and help with financial literacy content on the channel.