Boosting their financial literacy could pay dividends for many New Zealanders, new data shows.
Research from insurer Partners Life has highlighted the impact that poor financial literacy may be having on many Kiwis.
It found that the majority of respondents to its survey, at 62 percent, felt that worrying about money was affecting their relationships with friends and family.
Just over 40 percent were struggling to pay their monthly bills and almost a quarter were relying on credit cards or loans to get by.
Only half felt they were making the most out of their money and 46 percent of those who were not said that was because they lacked the financial planning or knowledge to do so.
Almost half said they had lost sleep or experience stress because of their money.
And although 75 percent said financial literacy was particularly important in the cost-of-living squeeze, more than 80 percent had never received any financial literacy training.
It mirrors research from Commission for Financial Capability that showed that although New Zealanders had a good understanding of concepts like inflation, interest and risks and return, many struggled with understanding compound interest, risk diversification and time value of money – concepts that can be very helpful when it comes to investment planning.
Those who bought on credit from truck shops or who were paying off a car loan had the lowest financial knowledge score, that research found.
Partners Life chief executive Michael Weston said a significant proportion of the population was dealing with financial challenges. But he said increasing knowledge would help people to thrive, not just survive, financially, with a more secure financial future.
It follows earlier research from Massey University, which showed that financial literacy was improving, but there was a gender gap when it came to self-reporting how financially literate research participants felt they were.
Last year, only 29 percent of women reported their financial literacy as “very good” or “excellent”, compared to 44 percent of males.
The research was part of a longitudinal study established in 2012 to track evolving financial knowledge, attitudes and behaviours.
It found that as the participants grew older, life experience had replaced their parents as the primary source of information on personal finance matters.
Director of Massey University’s NZ Fin-Ed Centre, Dr Pushpa Wood, said the pandemic had helped the research participants to learn some key lessons. She said many remarked that they had learned how important it was to be financially prepared for an emergency.
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