Why teach financial skills?

In the twenty-first century, more than ever before, kids need to know about money. They have to be better money managers than their parents’ generation to survive.

Because the world of finance has changed so much over the last 30 years, it’s now pretty easy for them to buy something on hire purchase, or to get a credit card, or a loan.

These days, young people leave tertiary study with sizable student loans. They face frequent changes of job, and need to know how to choose between a wide range of financial products and institutions, and if they’re getting a fair deal. They also need to learn about the importance of increasing their earning power through education and training.

Financial skills education can help them to survive in our complex world. Sorted can help kids to gain the confidence they need to manage their money at home and at primary school and at secondary school through financial skills education programmes.

Research shows that secondary school students in New Zealand have a low level of personal financial knowledge.¹ This may partially be due to a lack of emphasis on personal financial education in the New Zealand curriculum, and to a lack of resources being readily available to parents, caregivers and teachers.

The Retirement Commission have strong indications from qualitative research that New Zealand parents believe financial education is important and are keen to have access to information and resources to help them teach their children basic financial concepts.

Kids and Money is designed to help parents, teachers and children learn essential personal financial skills in a fun dynamic way.

Currently there is little personal financial education for New Zealand youth. Although Enterprise New Zealand Trust operates a range of financial education programmes including; the Pathways to Financial Literacy Programme in secondary schools, and the Primary Enterprise Programme in primary schools, these school based programmes only reach a small percentage of students each year. Consequently, it is likely many people start their adult lives with limited personal financial understanding.

Research conducted in the USA by the National Bureau of Economic Research indicates children who receive personal financial literacy education will accumulate more assets in later life than children with similar characteristics who don’t receive this education. These findings are from school-based programmes.

If we can encourage more Teachers and Parents to use tools such as Kids & Money’s Money Island, it is likely that similar findings would result.

¹ “An investigation into financial knowledge levels of New Zealand senior secondary school students”, December 2001, Lyn Morris.