Increasing financial literacy

WHEN ASB and Young Enterprise Trust released the results of their SmartStart survey in early 2009, the findings shocked many in the education and financial industries.

The survey found that 75 per cent of 8-12 year olds surveyed didn’t have a bank account and, if they did, it was rarely used; and 13 per cent couldn’t name a single financial institution, with over half only able to name one.

Alison Cowan, principal of Hampton Hill Primary in Wellington had heard similarly disturbing facts from a Retirement Commission report, which showed that when asked where money came from, the majority of children thought it came from a ‘hole in the wall’. “I vividly remember doing school banking myself as a child, and the learnings from that consistent discipline around saving money stood me in good financial stead for life,” she says. “On hearing that so many children had no idea where money came from, I contacted our ASB branch manager to see what they were doing about school banking.”

At that time ASB was about to embark on a school banking pilot project – its previous school banking system having been discontinued in the 1990s – and Hampton Hill Primary joined seven other schools in a trial banking programme.

Cowan says that by the end of the two term pilot, 60 per cent of her pupils had a bank account and were depositing, on average, $5 a week. “These children were committed to setting their own saving goals, and they kept it up which is the most important thing,” she says. “Now it’s a new school year and school banking has become a natural part of their week. It’s also a great topic of discussion between children, teachers and parents, who recall ASB school banking themselves as children.”

Other schools involved in the pilot have witnessed similar student engagement with school banking, and now more than 300 schools have signed up to the banks’ revitalised school banking programme.

The ASB system provides schools with a deposit envelopes, security bags and a secure deposit drop box for students to deposit their savings.

However, it’s not just ASB that offers students banking services through schools. The National Bank works with schools to train responsible senior students with an interest in maths to be bank tellers and help younger students deposit their pocket money.

Westpac also offers a similar scheme, as do the Credit Unions.

But schools now need to offer more than a banking programme to ensure students know where money comes from, how to budget and the pitfalls of credit card interest rates. And financial literacy is becoming an important part of the New Zealand curriculum and forms part of the new requirements for National Standards.

A further study, released to coincide with Financial Awareness Week in 2009 found that only eight out of 40 questions on basic financial literacy were answered correctly by more than half of the 443 students surveyed.

Diana Crossan, New Zealand’s retirement commissioner says the results of this survey are alarming but not unexpected considering the historical lack of financial education in schools

“Students need to be able to understand basic financial concepts to manage their lives effectively. Of most concern is that very few answered questions about credit card interest correctly,” she says. “Many students see the opportunity of getting a credit card as a rite of passage. But this survey, by the Young Enterprise Trust shows that they don’t understand the implications of not paying off the card in full every month.”

As a result, the Retirement Commission has released set of education resources specially developed for secondary school students. The resources are designed for teachers to use with year 11-13 students and cover credit cards, mortgage, budgeting and savings.

Younger students haven’t been left out either, with resources for years 1-10 available from the Ministry of Education and through ASB’s new GetWise programme aimed at primary school students.

ASB chief executive, Charles Pink, says the imperative to improve the level of financial literacy in New Zealand has been recognised for some time.

“The world of finance has become even more complex in recent times, so there is more need than ever for New Zealand children to be given the opportunity to learn simple but effective money management skills at an early age,” he says.

GetWise is based on a highly interactive workshop model developed specifically for New Zealand primary school children. The workshop content is entirely non-commercial and is designed in collaboration with leading experts in primary education, financial literacy and cognitive development.

“Our objective has been to offer a flexible financial literacy programme that will assist teachers as they work to deliver to the new national standards, while also providing them with the support they need in terms of future resources and lesson planning,” says Pink.

“We are very excited about the launch of GetWise. It is definitely the next step up in financial literacy learning and through our longterm commitment to this new skills programme we aim to help primary school teachers to make a positive difference for at least 50,000 primary school children a year,” he says.

Financial literacy resources for secondary schools are available from the following websites:

• www.financialliteracy.org.nz/financial-education-/-schools/ education-resources-years-11-13 • www.getwise.co.nz • www.nzcurriculum.tki.org.nz/Ministry-curriculum-guides/Financialcapability