Kiwis need to be much more money-savvy

23:16, Sep 06 2009
finance stand
Think ahead: Many people wait until late in life before planning their financial future. Financial awareness is more useful when applied earlier.

Today's Business View contributor is Lyn McMorran, a Wellington financial adviser who is president of the Institute of Financial Advisers. New Zealand's inaugural Financial Awareness Week is launched this week with the aim of helping lift our game when it comes to saving, managing debt, budgeting, protecting assets, saving for retirement and meeting investment goals.

For many Kiwis such a week is long overdue. Finance is a foreign language to many and this latest initiative is a step towards educating the public so they are more aware of the benefits of being financially secure.

Many people wait until their latter years before they start taking notice of investments, wills and trusts as well as planning their financial futures. But this knowledge is more useful when applied at an earlier age because the monetary input is less and the returns generated are greater.

Kiwis are among the poorest savers in the OECD. Households' indebtedness reached 160 per cent of disposable income in 2007, and in 2008 around 75.8 per cent of the household sector's gross wealth was invested in housing.

This compared with only a small proportion - about 11.9 per cent of household sector gross wealth - being invested in life, superannuation and managed funds or equities.

Lack of financial awareness threatens the prosperity of future generations.


Seeking good advice on how to manage your family's affairs, including insurance and investments, is essential for any family unit.

Simple things such as a will can easily slip through the cracks but have devastating consequences for family left behind.

It isn't common just among low socio- economic families, either. It is surprising how many young professionals with tertiary education are also unaware of the basic steps necessary to protect their future income streams. Financial awareness applies to all Kiwis.

We institute members attribute some of the low levels of financial awareness to little education in schools in the past.

We feel that if the younger generation were made more aware of issues such as investing, budgeting and planning for retirement, then New Zealand as a whole would be better off because we would all learn to save, invest and spend more wisely. Fortunately that is starting to change.

For that reason, members of the institute are this week giving presentations in high schools and local communities around the country as part of Financial Awareness Week.

The presentations are aimed at supporting high school financial literacy programmes and informing local communities about the basics of becoming financially aware.

Becoming financially aware means planning all aspects of your life and not just investments.

It includes protecting your income by taking out insurance, setting up trusts to protect your assets, having a will to protect your family and planning for retirement to protect your income when you retire.

There are many factors that need to be taken into account when wanting to protect your financial future.

That is why seeking good advice could change your life.

* The Institute of Financial Advisers is the professional body for financial advisers, including insurance and investment advisers and financial planners. The institute is an industry leader, representing about 1300 financial advisers throughout New Zealand.

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