Millennials and post-millennials rely on mum and dad for financial advice – even though only a third report believing their parents know what’s best for them, new research shows.
Five years into a 20-year study tracking people’s financial knowledge, the Westpac Massey Fin-Ed Centre found nearly half the participants had learned “everything” or “almost everything” from their parents.
While this was down from 66 per cent in 2012, the reliance on parental advice was surprising, given only 35 per cent said they believed their parents knew what was best for them financially.
When participants were asked how they expected to learn about money management in the future, parental advice still featured, but the dominant source, at 39 per cent, was “life experiences”.
Fin-Ed Centre director Dr Pushpa Wood said young Kiwis still seemed to avoid formal financial education or consulting financial experts.
“Relying on parents and taking a learning-by-doing approach to money management has some obvious risks, especially if parents are not financially knowledgeable, or if bad decisions lead to costly mistakes that are hard to reverse.”
The report presents findings from the second stage of the centre’s 20-year longitudinal study, which tracks the financial knowledge, attitudes and behaviours of a group of New Zealanders through different life stages. The study began in 2012 when the cohort was aged from 18 to 22 years and they were re-surveyed five years on.
“It was heartening to see that objectively-measured financial literacy scores have improved since 2012,” Dr Wood said.
“More than half the participants said they had taken steps to improve their money management skills in the past year, but questions remain about the sources of information they are using.”
The study found a gender gap in how participants performed in a financial literacy test. The average score for the financial literacy test was 70 per cent for men compared with 54 per cent for females.
Parents continue to be the primary source of information and lessons on personal financial management matters, although many doubt the knowledge their parents are imparting;
At 89%, participants have a very high participation rate in KiwiSaver;
65% budget and track spending;
60% wished they were better at saving;
67% think it’s better to dip into savings than use credit for purchases;
Only 30% considered long-term planning beyond 5 years;
72% still have a student loan to pay off;
- Impulse spending is a key problem;