How financially savvy are you?

ELOISE GIBSON
Last updated 09:30 14/06/2013

Related Links

Biz Quiz: Test your financial literacy

Relevant offers

Money

Kiwisaver helps second first-home buyers Hard to get more for less Homeowners caught short in disaster Help the parents, not just the kids Dream for a builder now a nightmare Boozy truth about our spending Low deposit house hunters on the rise Terry Serepisos not bankrupt, will give evidence Home loan rate rises further off Price of fuel drops; should go further, says AA

New Zealanders have beaten people in fourteen OECD countries at answering basic money questions.

We may not always think of ourselves as financial whizzes but when people in 15 countries were asked questions to test their grasp of financial concepts, New Zealanders were most likely to get them right.

We proved confident when asked about interest, inflation, risk and returns, but our Achilles heel was compound interest, with fewer than half of us understanding its effect on savings.

The only consolation was that other countries were worse.

Researchers from Colmar Brunton speculated that five consecutive quarters of recession, the collapse of finance companies, rising KiwiSaver, growing housing costs and the Christchurch earthquakes had all prompted more conversations about money.

Our weak spot relative to other countries was understanding the time-value of money, where seven countries beat us.

Overall New Zealanders' level of financial knowledge is unchanged since 2009.

Colmar Brunton sampled Kiwis' level of savvy in 852 hour-long face to face interviews in February and March for the Commission for Financial Literacy and Retirement Income.

The results reveal how our money habits are changing.

We are more likely to own store cards but less likely to own shares than we were in 2009.

We trust big financial institutions less than we did, but we're much more likely to use internet banking than ever before (six in 10 of us do).

People are much more likely to be in KiwiSaver and to know how much NZ Superannuation pays each week, but less likely to believe that either source of income will be enough to support them in retirement.

That might be why nearly two-thirds of us have investments outside KiwiSaver.

When it comes to making calculations from bank statements, Kiwis are growing noticeably more hopeless.

Both our ability to make forward calculations (how it long it would take to save an additional amount) and backward calculations (how much has already been saved) using a paper bank statement are falling.

Researchers were not sure whether our mathematics skills were failing or whether they should blame the fact that so many people now rely on internet banking.

The commission was heartened by how well New Zealand compared with other countries, but said the challenge was putting people's knowledge into action.

Executive director David Kneebone said there was a gap between what people knew and how they behaved.

"For example ... we found 85 per cent of New Zealanders understand what a budget is and 73 per cent believe everyone benefits from having a budget," he said.

Ad Feedback

"However only 61 per cent currently have a budget."

People's main source of financial advice was banks, with reliance on pamphlets, TV and print media falling.

Interviewers from Colmar Brunton sat down with people nationwide and asked them a series questions, including eight questions taken from a 2012 OECD International Network on Financial Education pilot study comparing financial literacy among adults.

On the eight OECD questions New Zealand emerged as top of the class, beating Britain, Germany, Hungary, Ireland, Estonia, Czech Republic, British Virgin Islands, Malaysia, Poland, Armenia, Albania, Peru, Norway and South Africa.

Seventy eight per cent of New Zealanders scored six or more out of eight.

Next-best were Hungary (69 per cent), Estonia (61 per cent), and Ireland (60 per cent). While Australia was not part of the OECD pilot, New Zealanders scored slightly better than Australians on three of the eight questions, which Australian were asked in a series of 2011 phone surveys.

FACT BOX
- 85 per cent know what a budget is
- four in ten know know how much NZ Super pays a week
- six in ten use internet banking
- five in ten are in KiwiSaver
- 16 per cent own shares
- 34 per cent have store cards

- Fairfax Media

Comments

Special offers

Featured Promotions

Sponsored Content