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Time to get smart about teaching financial literacy

To break the cycle of poverty, we need to get smarter about teaching financial literacy. Let’s make this generation the first to expect something better because we’ll do something different. First Foundation CEO, Kirk Sargent shares his insights on the issues and solutions.
At First Foundation, I am privileged to see what happens when you give a young person the tools and support to change their trajectory in life. Most of our scholars are the first in their families to have a tertiary education. They don’t only transform their lives; they create a ripple effect within their families and communities.

Money mojo matters

We’ve found financial literacy among our scholars is vital to their success. Over the last decade and a half, we’ve worked closely with over 1000 outstanding scholars. Year after year, they come to us without any education in financial literacy.

We can upskill and mentor First Foundation Scholars in financial literacy because of the generosity of partners such as The Simplicity Foundation – a charity itself. I often wonder why it’s New Zealand’s charities that are trying to fill this gap, and what will happen to all the students that we don’t reach. Will they be left to figure things out from TikTok?[1]

New Zealand compares poorly on financial literacy according to OECD data. More than half of our students rank at the bottom level of financial literacy than their peers in Australia.[2] Māori, Pasifika, and those in lower decile schools had a significantly lower financial understanding.

When compared with Canada, Australia, Ireland and Norway, New Zealand fell behind for:

  • Spending restraint
  • Struggling with impulsively buying things they cannot afford
  • Not borrowing for day-to-day expenses
  • Being financially confident. [2]

In the same OECD research, only eight per cent of New Zealand students were in schools where financial education is compulsory compared to the OECD average of 28 per cent. We can’t afford to be so far behind.

In New Zealand, some 70% of all students borrow from the government to study. The collective student debt is NZ$16 billion, with the average debt per borrower sitting at around $24,000.[3]

This whole generation is behind before they even start their careers. It’s unacceptable for young people to join the workforce financially unprepared and already so burdened. As a nation, we’re sleepwalking into a future of debt.

It’s a long term investment

Like it or not, financial systems shape our world. The more financially literate we are, the better we can engage with these systems. The younger generation is carrying a disproportionate burden of this economic cycle.[4]

Financial literacy is about empowering young people with knowledge to make healthy decisions with money. Financial education must be offered in all schools, ideally compulsory at senior levels, especially in low-decile schools.

Teachers and school leaders are virtually unanimous in their support for financial education, according to the New Zealand Council for Educational Research. Every school I know has a passionate advocate who struggles to get traction.

It’s true that New Zealand’s financial literacy is not something we can “fix” easily. But we have all the parts we need. There are dozens of financial capability programmes and resources on offer to schools.

We need to bring them together properly so financial literacy is woven into education as an essential life skill. We need collaboration throughout education, which demands leadership, commitment and coordination from central government.

If all we do is give the next generation the tools they need, I know they’ll build a future we’ll all be proud of. At First Foundation, our programme helps students overcome barriers that extend beyond financial disadvantage.

We recognise that access to tertiary education is not an even playing field. So, we provide our scholars with dedicated mentoring, exposure to the world of work and professional networks. And we watch them each help build an Aotearoa where all people can thrive and succeed.