19 November 2012

Young Kiwis know the drill but are not saving for the future

Young New Zealanders are aware of the savings message, yet two thirds are still not saving for the long term, a new report has shown.

The Fin-Ed Centre (Financial Education and Research Centre), a partnership between Westpac and Massey University, has released the baseline results for its 20-year longitudinal study, the first of its kind in New Zealand.

Of the 18 to 22 year olds surveyed, 77 percent say it is not important to plan any further than four years ahead when it comes to finances.

Budgeting also remains a major concern with only 52 percent giving any thought to financial goals, spending habits and ways to manage money.

But the findings also show that 80 percent of those surveyed agree it is better to make purchases from savings instead of oncredit and more than 90 percent recognise the importance of saving.

Thirty eight percent of those surveyed owned a credit card and nearly 80 percent believed credit cards could be problematic. More than 90 percent compared prices when shopping.

How parents spend their money clearly has an impact with 66 percent saying they learnt everything about their finances from their parents. Seventy two percent looked to their parents as positive financial role models.

Dr Pushpa Wood, director of the Fin-Ed Centre, says the survey of 300 young Kiwis will be repeated with the same participants every five years for the next 20 years.

“The findings from our young participants will act as a benchmark for how much information young New Zealanders currently have on personal financial matters and where they access this information from.

“We do need to have a better understanding of ‘trigger points’ for young people to seek this information. Through this study we will be able to identify needs for financial knowledge at various life stages, find gaps in education programmes being offered and track the overall increase in financial literacy levels.”

Simon Power, Westpac’s Managing Director of Private, Wealth and Insurance, says: “The study stands as a baseline and there is clearly a lot of work to do in educating young New Zealanders about the importance of saving and budgeting.

“Yes, we are making some headway, but clearly not enough, and not fast enough. The positive is that over the past four months we’ve seen an increase of six percent in KiwiSaver sign-ups in this age group, but there’s a lot to do on a number of levels.”

Professor Ted Zorn, who heads Massey University’s College of Business, says the study builds on the existing work the Fin-Ed Centre has done to improve the financial literacy of all New Zealanders.

“Massey is committed to helping New Zealanders become more savvy when making financial decisions and this survey gives a great insight into the money decisions our 18 to 22 year olds are making.

“There has been a great response to the Fin-Ed Centre’s initiative, particularly the online tutorials where we’ve seen more than 50 Kiwis signing up to brush up on their personal finance skills. The importance of this research and the work of the centre cannot be underestimated.”