Skip to content

Industry, regulators and educators lament the poor level of understanding that people in Aotearoa have of basic money management. What can be done? Let’s be bold – nah, she’ll be right.

Key points

  • The time is now (yes, we are in a recession!)
  • How bad is it?
  • Sustained change? Education and investment.


The time is now…

Question. How many of you go through an entire week without having anything to do with money? Whether you are thinking about how to earn it, spend it, protect it or make it work for you. I challenge any of you to go a week without having any thought about money at all.

Would it be fair to say then, that money is quite a dominant factor in our existence?


So why do most people know so little about it?

New Zealand is in Recession. This is not new news. “Statistics New Zealand has announced that New Zealand experienced its largest single quarter decline in GDP, with a 12.2 percent fall for the June 2020 quarter. This is the largest decline since March 1991 quarter when New Zealand saw a 2.4 percent decline.”

What does that even mean to most people? In my opinion, based on observations, it actually means very little to most people. Do people have a job? Are they being paid enough to buy food and watch Netflix? Do they have some certainty about the next 6 months?

Most people don’t understand money.

There, I’ve said it.

The elephant in the room.

You can talk about interest rates, bear markets, recessions and house prices. But most of it is meaningless to most people.

Second question: Is this good for NZ Inc? Is it good for New Zealand to have one of the lowest financial capability scores in the OECD?

Third question: Does anyone else think that a recession is a great time to change our behaviours?

How bad is it?

I’ve written previous articles about financial education and money management, but I’ll take a punt on boring your by repeating some things. 62% of Kiwis worry about money at least monthly.

  • There is a strong relationship between money and wellbeing

25% of people are majorly influenced by financial wellbeing

  • Financial issues impact mental health

19.8% of people are adversely affected by money issues

  • Financial issues impact relationships

15.9% of people’s relationships are adversely affect by money


The Commission for Financial Capability made recommendations (CFFC Financial Capability Barometer 2018-2019). Specifically, that people should understand simple compound interest and the ‘time value of money’. Why? Do you know what the interest rate is for your mortgage or that Pay Day loan you have? How are the repayments figured out? How do you know just how much you are paying in interest above the principle, or how long you will pay it for?

Who are the key people highlighted as needing help? “The gap between younger and older people, women and men and Māori and Pacific Peoples and Europeans is most pronounced”.

There was also mention about risk diversification in the recommendations, but compound interest came out with the strongest need to be resolved.

Now let’s turn this a little bleak. How money effects relationships. “Good relationships with partners, family and friends support good mental health and resilience. Yet the CFFC’s Financial Capability Barometer Survey of 3132 adult New Zealanders found that 1 in 5 (19%) respondents had problems with interpersonal relationships (partners, family or close friends) due to financial concerns.” We’ll join some dots here. Financial stress, emotional stress, relationship stress… What is the extreme of this stress? Does NZ have a challenge with suicide rates? Is that taking this argument too far?

I’ve shown you some research from regulators and Government bodies, let’s take a quick look at industry. An easy one is a recent study from AIA Life. The research showed that over a third of Kiwis don’t want to think about ‘difficult but necessary’ topics like death or serious illness, or the financial impact it might have on their family. “… two thirds of Kiwis having never had a conversation about life insurance…” [Nick Stanhope, CEO of AIA]

If you are a regular reader of my blogs, you will know my views on the importance of life insurance as part of a personal money management programme. Yes, I am a financial adviser, so you can be forgiven for thinking cynically. However, when barely 25% of adults have life insurance, I think that is a concern. The impact is not just on the individual; the family and community are impacted by this utter ignorance of financial protection.

Sustained change? Education and investment.

Education – start young

The NZ Curriculum (for schools) website states that “Financial capability is highlighted […] as an example of the type of theme that schools could (my italics) use for effective cross-curricular teaching and learning programmes.”

Here is a thought. If having such a poor financial capability is economically detrimental to NZ Inc, why not make this mandatory?

Pushpa Wood from NZ Curriculum says that very broadly, there are two key sections to think of in terms the financial curriculum. These are “skills and motivation’ (or behaviour). Skills can be taught. Behaviours can be learnt.

Investment – more of it

This is where industry and regulators need to step up. How many reports and discussions are needed before there is actual investment to help people lift their “skills and motivations”? Again, from my perspective, it is in the industry’s best advantage to have a knowledgeable client base. I’ll let someone else do a back of the envelope calculation to work out if life insurance alone went from 25% of adults to 35%…? It would likely add a few billion dollars to the industry as a crude guess.

Our role as industry is to educate people. Before they become clients. Give first. Give information for free. There is no value in IP (intellectual property) of basic money management information in 2020.

Again to the NZ Curriculum and their vision for financial capability…


“The cross-curricular theme of financial capability supports the vision by providing a learning context for students to become:

  • informed decision makers
  • financially literate and numerate
  • enterprising and entrepreneurial
  • contributors to the well-being of New Zealand.

Supporting students to become responsible, confident, and independent managers of money will enable them to live, learn, work, and contribute as active members of their communities.”

A fantastic vision.

However, forgive me for being a little simplistic, but the first and possibly second point appears to be the same in intention as the Code of Conduct that we’ll be adhering to 15th March 2021. This is good, but we can help move things along.

What if we were able to lift the financial capability of ordinary Kiwis above current levels? Could these type of skills, compound interest and time/value/money help the ‘engine room’ of New Zealand, the SMEs? Could a concerted effort in this space help NZ communities in lower socio-economic demographics manage their financial stresses a little easier? Let’s be bold… could some drastic work in this area help reduce the suicide rates in NZ…?

Nah, she’ll be right mate – don’t rock the boat, she’s sinking all on her own. As long as the housing market keeps going up, then 5% of the population will be sweet-as bro.


Dominic Bish

Wait, before you go.

We want to hear from you.

It can be difficult for people to give feedback or to make comments on the sites they land on.

This is your opportunity to tell us your concerns with life insurance, risk management and finance.

what is your burning question?