Financial Literacy is crucial to New Zealand, but why?
- Leading cause of worry in some Kiwi households is debt and finances
- Reports show that New Zealand has one of the World's largest household debts
- 1 in 5 young adults claim that stress, due to their financial situation, has caused them to feel physcially ill
Let's be fair, none of that sounds good. Financial literacy is not about getting more money to do more things, and fix all our problems. So what is it?...let's break it down.
What is Financial Literacy?
Quite simply financial literacy is having the understandng of how money is made, spent and saved, while also using knowledge and skills to make effective financial decisions. Wouldn't you like to know how to generate, spend, invest and save money? Thing is, people immediately think that they just need "more" money. Well, financial Literacy is about using resources and products that are already available to use for your maximum benefit.
Significance in New Zealand
Lack of basic financial knowledge results in poor investments and financial decisions. This does more than just affect our bank accounts. It takes a toll on our countries mental health as well. Let me explain...
You have made a bad investment due to lack of kowledge. You are now out of pocket. Burnt and disheatened beginning to become sceptical, possibly developing a fear of future investments. You may even begin to question yourself. A once corageous, ambitious investor is now no more.
Maybe you have developed poor spending habits. Not by choice, but it is the only way that those around you have role modeled how to use money. Further down the track you have accumualted debt, maybe you are just struggling to make ends meet. Leaving you stressed, hopeless, unable to see any solution.
Pity is there are many people in New Zealand that have these exact feelings. Financial Literacy does more than fill our pockets it helps minimise money caused pain and tension.
Here are a few questions which you can ask yourself to know your financial literacy rate:
- Are you able to understand basic financial concepts like compound interest, credit scores, mutual funds etc?
- Are you able to make effective financial decisions?
- Do you know the best ways to generate cash flow?
- Are you able to make effective financial planning?
- Are you able to manage your personal finances well?
- Are you aware of the most profitable savings techniques?
- Do you have enough savings for your rainy days?
- Do you live a debt-free life?
- Do you know the best investment options for gaining maximum profit?
- Do you have the solutions for your financial problems?
Now, if you are unable to find satisfactory answers to these questions, then you definitely need to educate yourself on financial concepts as soon as possible. The lack of knowledge on financial literacy may lead to making poor financial decisions that can have serious impacts on your financial well-being. Hence, it is high time we understood our finances well and did better financial planning and investments for a smooth financial life.
Learn more through our Financial Empowerment Programme.