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Financial Capability Matters

Financial Capability Matters

Financial Capability Matters

3 November 2021

Sue Lewis talks to Kendall Flutey of Banqer, Terry Shubkin of Young Enterprise Trust and Dr Pushpa Wood of Westpac Massey Financial Education and Research Centre about financial capability and the state of the nation.

How are we doing?

In the recent Standard and Poor’s Global Financial Literacy Survey, New Zealand ranked 11th in the world. Out of 148 countries, that’s not too bad. Sixty-one per cent of us passed a financial literacy test, compared at the extremes with 71 per cent of Scandinavians and 28 per cent of Chinese.

Overall, our financial literacy does look fairly healthy. But as Kendall Flutey suggests, we may outperform countries with our literacy but capability is another step up again. “It’s about enacting good financial practices.”

While considering the results a fair reflection of the current state of the nation, Flutey notes that certain sub-groups cause concern. Dr Pushpa Wood agrees. “While we may be doing well overall, we also have pockets of our population, including our youth, with really low levels of financial capability.”

Of particular concern are results from a 2012 PISA survey that reveal 27 per cent of Māori and 44 per cent of Pāsifika students had scores that placed them at the most basic levels of financial skills and knowledge. What this means right now, Flutey says, is that a real need and opportunity exists, to make positive changes.

Spend, spend, spend

In New Zealand, debt is common. “We live in a culture with a ‘buy now, pay later’ attitude,” Flutey says. And while the idea of financial capability is becoming more popular, many common triggers – through marketing and the general media – point in the other direction.

Dr Wood agrees that we live in a society of instant gratification. In general, she says, there’s nothing wrong with that, “provided we’re not borrowing to fulfil desire, especially when we have NZ$3.7 billion of credit card debt.”

It has to be noted, here, that while banks may promote financial capability and savings schemes on the one hand, they are also profiting from New Zealand’s debt culture on the other.

Focusing on the future

Like most Western cultures, New Zealand has an ageing population, which means an increased need for private funding that will see us through retirement. In this regard, Dr Wood also believes there is still “a lot of work to be done with women and their preparedness for retirement, especially Māori, Pāsifika and women of other ethnicities.”

We also need to save for rainy days. In the broadest terms, Dr Wood says, it seems our older generations are more careful about living within their means and putting something away for tomorrow. But our investments generally tend to be channelled into property, meaning if the housing market were to fail, investors could become economically weak.

How did we get here anyway?

Dr Wood suggests that we need to have more open conversations about managing money. One of the biggest barriers we have to overcome is how to make this conversation less difficult.

Our level of financial capability can be further complicated by money rapidly becoming ‘invisible.’ “Young children in particular don’t understand where money comes from (apart from the ‘hole in the wall’ money machine), how it’s spent or how to manage it so some is left for tomorrow.” Flutey also suggests that the move to digital has meant younger people don’t have such an involved relationship with their finances.

Terry Shubkin thinks it’s crucial that kids learn about being financially capable from home and school, not one or the other. Otherwise, by the time they hit the real world, she says, they haven’t actually developed the discipline of managing their money or how to make informed decisions. “And they don’t realise they’re starting themselves on a path that will only become harder to leave.”

So how can we do things differently?

Many experts agree that any move towards better financial capability has to be a combined effort from government, the private sector (particularly lenders) and schools.

Angus Dale-Jones of the Professional Advisers’ Association agrees that a lot can be done to help consumers understand financial capability. Consumers also need to be aware of the positive contributions that financial services can make to peoples’ lives, “particularly people with limited financial circumstances.”

However, just because a person is wealthy doesn’t mean they’re financially capable. As Shubkin states, capability does not relate to how much money you earn. “Being in a good financial position is not about wealth creation, it’s about having choices and being able to weather life’s storms.”

In schools, many teachers practise meaningful financial capability with their students. At Gladstone Primary School in Auckland, students earn paper income for showing up to school, as they would in work. The students also earn interest on income that isn’t spent and pay rent on their desks.

Reaching a tipping point

Having worked in the field of financial capability for over 20 years, Dr Wood believes that we have come a long way, but that we still have a lot to learn about changing people’s behaviour. Wood thinks we have enough resources but need capable people to make the best use of these resources for the intended audience. She says we also need to ensure the consistency and quality of programmes.

Flutey suggests we’ve reached a tipping point where “we do need to start combating financial illiteracy as a joint force between government, the private sector and schools. The Commission for Financial Capability plays a key role in creating ways to do this, such as Money Week, where we can all connect and contribute to the one mission.”

A brighter future

Dr Wood wants to see multi-generational programmes that will encourage entire communities. She believes “the money conversation needs to start at home” and that people need to want to learn about managing money. She thinks it’s also important for people to see the importance of making financial decisions that are appropriate for their circumstances.

Shubkin agrees. “To create a change in behaviour you have to create the desire to want to change, and you can’t educate somebody unless they want to be educated. Changing the behaviour of 4.4 million people is going to take time.”

Shubkin’s hope is that financial capability will remain a topic of conversation and that all young adults will not only have education in financial capability but also practical experience when they leave home. “Real change stems from younger generations, like the move away from smoking and not wearing seat belts. The next generation always drives the message home and that in turn helps change the views and behaviour of older generations.”

Dr Wood’s hope for the future is that “financial capability is accepted as a basic human right, along with literacy and numeracy”. She also hopes to see every child leave school with the skills to manage their financial well-being and positively contribute to the economy.

Flutey wants to see a generation of Kiwi children moving through the education system, equipped to handle financial situations. “We want to see this trickle down cyclically, year after year, becoming a mainstream value and extending into the household, educating parents as well.”

The 2013 ANZ Financial Knowledge and Behaviour Survey revealed that very little had changed in terms of New Zealanders’ financial capability between 2009 and 2013. Let’s hope the future will be much brighter than that.


Financial literacy: possessing sufficient know-how, understanding and resources to potentially manage money.

Financial capability: having the mindset and behaviours required to successfully manage money.


Banqer is an online banking system for classrooms. Each student is set up with their own bank account and can transfer money, set up automatic payments, track spending and much more. As students learn, modules can be added to help them progress along the path to financial literacy. Banqer is a fun, easy and manageable way to gain financial capability skills.


Young Enterprise aims to inspire young people to discover their potential in business and in life. By offering a range of enterprise programmes, Young Enterprise provide experiences that are both authentic and relevant to the real world. The goal is to help students unleash their entrepreneurial spirit, adapt to changing circumstances, recover from failure more quickly, feel success and learn how to collaborate in teams.

Young Enterprise also provides financial literacy resources that teach students to be smart with their money so that they can have more choices in life.


The Fin-Ed Centre is a joint initiative between Westpac and Massey University. The centre works to help New Zealanders become more financially savvy by improving their knowledge, attitudes and behaviour towards money.

The centre aims to give people the tools they need for the life-long process of managing their finances. It provides mentoring, practical learning and consultancy and is actively researching in areas of relevance to financial literacy in New Zealand.

The Fin-Ed Centre is part of the International Network on Financial Education, which is overseen by the Organisation for Economic Co-operation and Development (OECD).

First published December, 2016

By Sue Lewis

The editorial below reflects the views of the editorial contributor only and content may be out of date. This article is sourced from a previous JUNO issue. JUNO’s content comes from sources that it considers accurate, but we do not guarantee that the content is accurate. Charts are visually indicative only. JUNO does not contain financial advice as defined by the Financial Advisers Act 2008. Consult a suitably qualified financial adviser before making investment decisions.

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