Youth know money makes world go round

CHALLENGING PERCEPTION: A Rabobank survey shatters the illusion that young people are financially unaware and irresponsible.
CHALLENGING PERCEPTION: A Rabobank survey shatters the illusion that young people are financially unaware and irresponsible.

The myth of feckless youth which does not understand the value of money should be laid to rest, new research from online deposit bank RaboDirect suggests.

Mel Templeton, general manager of RaboDirect, said the research showed 97 per cent of those aged 18-29 were saving for something, a result that contradicts the typical impression of youth as financially irresponsible.

It was one of a number of surprising results in a survey by Rabobank, which was timed for release to coincide with Money Week, a new date in the New Zealand national calendar devised by the Commission for Financial Literacy and Retirement Income.

"It was really interesting that 97 per cent of the young people we surveyed were saving, which is in total contrast to the general impression," Templeton said. "The media has been particularly scathing of the ‘I want it now' generation."

That generation is in fact saving for varied targets such as house deposits (29 per cent) and holidays (30 per cent), but they are also a generation that is highly focused on the importance of money.

When asked if they agreed or disagreed with the statement "Money makes the world go round" 76 per cent agreed, more than in any of the older age brackets surveyed.

They also scored most highly for knowing exactly how much money they had in their transaction accounts (60 per cent said they knew), and in their savings accounts (74 per cent said they knew).

Templeton said the revelations about the young in the survey of about 500 people by TNS, might well reflect a rising focus on financial literacy, and was welcome.

But not all the findings were so cheerful.

That less than half of people know how much interest they are being paid on their savings was shocking as it meant many were missing out on getting paid higher rates of interest.

That meant there was a lot of "lazy money" in New Zealand that could be earning higher interest, Templeton said. "You wouldn't walk past $5 in the street. You'd pick it up."

Templeton was also concerned many people believed being in KiwiSaver means they can stop worrying about retirement savings.

"One in five people aged 30-39 thought that because they were in KiwiSaver, they didn't have to save any more for their retirement. That's a big worry," she said.

Templeton said seven in 10 people were worried how their kids would be able to afford to buy a house. Contrary to the perception that young people could borrow 95 per cent of the value of a house, careful weighing up of risk by banks meant many had to have far bigger deposits to get into their first home.

Sunday Star Times