Financial Literacy

What is financial literacy?

Although most people can read, write and use numbers, many lack the skills to understand unfamiliar and technical information contained in banking and insurance documentation and product brochures.  

Financial literacy involves the ability to make informed judgements and effective decisions when using and managing money.  Good financial literacy will enable people to:

• make ends meet
• keep track of their finances
• plan ahead
• make sound judgements when choosing financial products
• stay informed about financial matters.

What needs to be done to improve financial literacy?

More needs to be done by financial sector organisations to improve New Zealanders' financial literacy skills by explaining the key financial vocabulary and concepts. 

Achieving improvements in financial literacy will require financial institutions to:

• do more to improve people's financial literacy skills (rather than simply focusing on increasing their knowledge)
• do more to identify and remove the literacy barriers that complicated services and systems place on individuals
• place a stronger emphasis on supporting and building customers' financial literacy skills.

The benefits of improving financial literacy skills

Improved financial understanding will provide a strong foundation for further communication and education about financial matters.  The positive flow on from this helps New Zealanders to make informed investment decisions to benefit themselves, the investment sector and New Zealand's economy as a whole.

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