Financial literacy, while scary at first, is an important skill for everyone. Financial literacy is defined as the knowledge and understanding of personal finance, budgeting, investing and personal risk management. Learning these skills will help you have a more secure and prosperous future.

According to the Commission for Financial Capability’s 2021 report, 46% of New Zealanders struggle to make ends meet and 70% are concerned about money. More and more people are applying for hardship withdrawals from their Kiwisaver and Super Schemes. We are also seeing a lot of people who are newly vulnerable. These are people who have become financially vulnerable due to COVID-19 or the recent economic changes (High Inflation, High mortgage rates, etc). A large portion of this group has historically been in well-paying jobs but are now struggling to make ends meet.

This financial stress might be lessened by increasing financial literacy and making smart money management decisions. Anyone may fulfil their financial goals, like having a holiday, retiring comfortably, or starting a business, with the right knowledge.

According to a Westpac NZ survey, more than 60% of Kiwis have low financial confidence. This lack of confidence might result in anxiety and stress over personal finances. Financial literacy may be used to help individuals manage theirs and their family’s financial life and achieve financial independence.

Consider two hypothetical individuals, Tama and John, as a demonstration of the potential benefits of financial literacy. Tama, who is financially savvy, controls his spending, consistently saves and invests, and keeps an emergency fund. John, on the other hand, is unable to handle his finances owing to a lack of financial literacy and struggles to save and make ends meet. Tama’s planning puts him in a better position than John, who is facing financial difficulties, in the event of an unexpected disaster.

The impact of financial literacy is not limited to personal success; it also has broader societal implications. A society in which everyone has the knowledge and abilities to handle their money properly would most likely have lower poverty rates, more economic growth, and better communities. This would free up social assistance services to focus on other areas of acute need.

All New Zealanders can achieve financial literacy, and there are several tools available to help them along the way. Books, courses, and professional advice are all excellent resources for helping people improve their financial abilities. Beginning early in your financial education can lead to improved long-term outcomes.

To summarise, financial literacy is crucial for individuals to guarantee a bright future and positively contribute to New Zealand’s economy. Overcoming fear of the unknown and accepting the challenge of financial education may improve the lives of people and communities. By investing in financial literacy, New Zealanders are investing in their own and the country’s future. It’s time to emphasize financial literacy and take charge of your financial future.