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We Kiwis aren’t as financially literate as we may think

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Us Kiwis may not be as financially literate as we’d like to be.

Over the past few years, research has been done to find out how well New Zealanders manage their finances. And the results show us we have room for improvement.

In early 2020, a Finder survey said that one in three Kiwis are living paycheque to paycheque. The surveyors also said that 1.4 million New Zealanders do not have an emergency fund, a core component of any financial strategy.

To add to this, an ANZ report stated that in December 2019, 27.8 percent of Kiwis were getting by or struggling financially. And while this report showed evidence of our financial wellbeing increasing overall, statistics like these are far from ideal.

You may think that the reason some of us struggle financially is because we do not earn enough money. While some Kiwis suffer from a lack of income, many of those with higher levels of income also experience financial problems.

In a 2017 BNZ survey, 23 percent of respondents earning $100,000 to $150,000 a year said they were living payday to payday. 14 percent of respondents earning $150,000 a year also said they were living payday to payday.

This suggests that some of us still have problems managing our money, even when we have lots of money to spend. In other words, it’s not just about how much we earn, but how well we spend it.

There are many reasons why some Kiwis don’t feel financially secure. Here are three of them.

1. Some groups of Kiwis have lower levels of financial literacy

In 2012, the Programme for International Student Assessment (PISA) evaluated how financially literate our 15-year-olds are compared to other countries. And while we scored above average as a nation, some of the details from this survey are concerning.

The national average score in this test was 520 points. However, the 25 percent of students deemed socially and economically disadvantaged averaged only 459 points. Those that come from an immigrant background or do not speak English at home also scored lower on average.

Kiwis without a strong financial foundation are more likely to feel financially insecure in the future. This is why it is important for us Kiwis to be money savvy people that are knowledgeable about personal finance.

2. Kiwis are not as aware about their financial situation as they should be

The Commission for Financial Capability, a Government agency, published a survey using data from 2018 and 2019. This survey showed numerous areas where New Zealanders are not financially aware.

For example, out of all employed people, 75 percent of them were in KiwiSaver and contributing. However, of this group, 27 percent did not know what their type of fund was, 17 percent did not know their contribution rate, and 10 percent did not know either of those details. 

Additionally, the same survey said that almost two-thirds of respondents were not thinking much, or at all, regarding the amount they needed to retire.

These are important details that people need to know in order to make sure they are financially prepared. If not, one may find that they are not as ready for retirement as they'd like to be.

3. Kiwis do not see the benefits of getting help with their money

A recent Money and You survey showed that while 35 percent of us would consider taking financial advice, only 18 percent of us actually receive it.

60 percent of New Zealanders see the benefits of financial advice according to this survey. However, the remaining 40 percent do not. 

The Money and You survey showed that Kiwis who get advice have increased levels of financial and overall wellbeing. If you want to do well with money, be like the 60 percent that understand the benefits of financial advice.

The importance of being financially prepared

Despite all the money problems that New Zealanders experience, many Kiwis are not convinced that they should be financially prepared.

It is important to make sure that you get on top of your personal money matters. By doing so, you can give yourself a financially secure retirement and avoid the negative impacts of not being prepared. To do this, you need to learn how to become money savvy.

One way New Zealanders can be money savvy is by reading and educating themselves. National Capital has numerous blog posts you can read to help you increase your KiwiSaver knowledge. You can check out our approximately 100 blog posts (and it keeps growing in number!) by clicking here.

If you want to go one step further and really help yourself out, you can fill in our KiwiSaver HealthCheck. By doing so, you will get the privilege of receiving free financial advice that will help you learn more about personal finance.

You’ll get the opportunity to talk to a real person about how to most adequately prepare for retirement and learn more about how to improve your money situation and what KiwiSaver funds are best for you.

How are we able to give this sort of advice to you? We do this through analysing the information you provide us in our KiwiSaver HealthCheck. This way, the advice is more personalised and appropriate to your situation.

Our HealthCheck isn’t a test or a quiz. And don’t worry - the questions are not difficult, and you can take all the time you need to complete it. 

So, take the time out to learn more about your financial situation! Fill out our KiwiSaver HealthCheck today.

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