Most secondary school students are finishing school with a poor understanding of basic financial concepts, a survey by the Young Enterprise Trust has found.

The 40-item multi-choice questionnaire was put to senior students from a cross-section of 54 New Zealand schools and was based on common personal-finance areas such as income, budgeting, insurance, investment and savings.

A total of 443 students responded, and only eight of the 40 questions were answered correctly by more than half, despite some students having financial literacy training.

The worst areas were questions relating to investment, compound interest and risk. Poor performance was also shown in questions about shares, and KiwiSaver - the Government's retirement savings scheme.

The results indicated that students were leaving school poorly prepared for financial independence, said Young Enterprise Trust financial education national director Lyn Morris.

In 2001, Mrs Morris put 30 questions to senior high school students. Results were so poor she recommended financial education become part of the core curriculum.

She said lack of knowledge had led New Zealanders to make poor financial decisions in the past even if they were careful with their money.

Lower savings levels in New Zealand meant wealth was not being accumulated and could cause problems as baby boomers retired with lower savings and New Zealand struggled to pay for superannuation from fewer workers, Mrs Morris said.

Retirement Commissioner Diana Crossan said the survey results were shocking but not a surprise.

"Why would you expect a high level of financial awareness when they don't teach it at schools and parents don't have the skills themselves?"

Ms Crossan said she did not believe that financial literacy in New Zealand was any worse than in other countries but the global financial crisis and local meltdown of the finance company sector had brought home the need to increase people's awareness.

She believed the standard of financial literacy was not strong because financial products had become more complicated, schools had not kept up on the education front and parents did not have the skills to teach their children.

That lack of awareness meant that some children were getting a negative credit rating before they even knew what it was because they took out mobile phone contracts and stopped paying for them.

Other young people were racking up fees on eftpos transactions because they were encouraged to use the cards regularly as a child when often there were no transaction fees, Ms Crossan said.

The Retirement Commission last year began a pilot programme in schools to help to reintroduce financial literacy and that has since been taken up by the Ministry of Education.

Ms Crossan said resources for teachers would go live on the ministry's website this week and the commission hoped that unit standards would be introduced over time so that children would be tested under NCEA on their financial awareness.

The survey results have also been released to coincide with a new national Financial Awareness Week organised by the Institute of Financial Advisers with the support of the Retirement Commission.

Institute chairwoman Lyn McMorran said: "There is an urgent need to increase focus on financial literacy and both parents and schools must play a part in ensuring young people are provided with a sufficient level of financial understanding before leaving to partake in the real world."

* Sample question
If you invest $1000 today at 4 per cent for a year, your balance in a year will be?

a) Higher if the interest is compounded daily rather than monthly.

b) Higher if the interest is compounded quarterly rather than weekly.

c) $1000 no matter how the interest is computed.

d) $1040 no matter how the interest is computed.

Correct answer is A.