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KASH – The Answer To Financial Capability

‘Financial literacy’ is a term that is increasingly going out of vogue. In its place, ‘financial capability’ has moved in. But how many people really know the difference between the two? You can be financially literate but not capable, and KASH (knowledge, attitude, skills and habits) can be applied to bridge the gap.

3 November 2021

Financial literacy is about knowledge and skills: a financially literate person knows a lot about finance. However, being literate in finance does not necessarily make you capable.

To be capable requires more: capability extends beyond knowledge and skills to behaviours that help you manage money effectively. Someone could easily pass a finance exam and demonstrate that they knew a great deal about the topic but, when you had a look at their personal affairs, you could find that their finances were a mess. They are literate, but not capable.

Literacy is a prerequisite but is only part of the game. To have financial capability you must have financial literacy (knowledge and skills), but you also need the right attitude and habits. The right mindset and behaviours (along with knowledge and skill) mean that you are ready, capable and fit for the purpose of looking after your finances.

Financial capability and budgeting

Budgeting is a good example of the difference between financial literacy and financial capability. Many people would claim to understand the principles of budgeting. We know that we need to plan how much income we are likely to have and where we are going to spend it. We also have the skills required to budget. Manual addition and subtraction may be all that is needed or we could use a budgeting calculator, such as the one provided at www.sorted.org.nz.

Many people have this knowledge and skill. But, are they capable? And, if not, what stops us from doing some kind of plan? Why are they not capable of doing a budget?

The answer is that most people do not have the right attitude or habits. The knowledge and skills to prepare a budget are relatively easy to acquire. However, having the right attitude and developing the habits that allow you to prepare a budget and live to it, are in fact, much more rare.

Having the right attitude

The acronym KASH is an easy way to remember this. KASH stands for knowledge, attitude, skills and habits. In just about any venture or project you might choose, you can assess and try to improve your performance by looking at each to see which of these four things is holding you back.

In my experience, when it comes to the management of money, it is seldom a lack of knowledge or skill that creates problems – it is almost always the wrong attitude and bad habits.

Our attitudes usually come from our upbringing. They cover our ideas, beliefs and mindsets and they guide and drive our behaviours. Negative or defeatist attitudes will stop us from managing our money well.

The book Think and Grow Rich by Napoleon Hill is about personal achievement and attitude. First published in 1937, it has now sold around 70 million copies worldwide. Even though this book is now nearly 80 years old, it is one that I often recommend to my clients.

Developing good habits

Our habits are even more important than our attitudes. Habits are what we repeatedly and routinely do, the behaviours we default to: someone who has financial capability has the right habits.

It is the things that we frequently do that ultimately define the line between success and failure. We all have habits, good and bad, and it is these behaviours that make us or break us.

Sometimes habits that may seem quite trivial can make a big difference. For example, good weekly food and grocery planning can lead to fewer supermarket visits, which leads to less money being spent. It is well known that a high percentage of supermarket purchases are unplanned and that the more often you go, the more you will spend. Ultimately, the habits of poor meal planning lead to more expense.

Many other good habits can help people with their finances: regular saving; using cash for spending; planning for Christmas; waiting for specials; regularly reviewing your KiwiSaver account, your mortgage and your utilities; and so on.

These are habits we can all develop, and they illustrate the difference between literacy and capability. Just remember: it’s the doing, not the knowing, that makes success.

Martin Hawes is an Authorised Financial Adviser. Martin’s disclosure statement is available on request and free of charge, or can be found at www.martinhawes.com. This article is of a general nature and is not personalised financial advice.


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.

First published 7 December, 2016

By Martin Hawes

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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