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Why is financial capability important?


Exploring and understanding the factors influencing people’s financial decisions will position students/ākonga to make more informed financial decisions. It will also contribute to a deeper understanding of self, others, and society.

Taking Part in Economic Communities (PDF 2.4MB)

“Financial education is a process which leads to financial literacy. The Organisation for Economic Co-operation and Development’s (OECD) definition of financial education is:

Financial education is the process by which financial consumers/investors improve their understanding of financial products and concepts and, through information, instruction and/or objective advice, develop the skills and confidence to become more aware of financial risks and opportunities, to make informed choices, to know where to go for help, and to take other effective actions to improve their financial well-being.

Education programmes are seen as one important way of helping to change people’s attitudes and behaviour in order to deal with financial pressures and make more effective decisions about their personal finances.”

National Strategy for Financial Capability

Discussion tools

Exploring the research

Discuss the research

There is a relatively low level of financial knowledge compared to studies in other countries.

Young New Zealanders lack opportunities for formal financial education to assist their development of sound personal financial management skills.

How young New Zealanders learn about personal finance: A longitudinal study

“The education of the younger generation on financial issues has become all the more important since they will likely bear more financial risks and be faced with increasingly complex and sophisticated financial products than were their parents. Additionally, the young have access to, and are being offered, financial services at ever earlier ages (through pocket money, cell phones, bank accounts, or even credit cards).

Yet, most recent surveys show worryingly low levels of youth financial literacy and capability and, in many cases, significantly lower levels than those of older generations.

Against this backdrop including financial education in the official school curriculum is considered one of the most efficient and fair ways to reach a whole generation on a broad scale. In addition, since the curriculum spans several years and can start as early as kindergarten, it is a unique means to inculcate and nurture a more sound financial culture and behaviours in future adults. This is especially critical since parents are unequally equipped to transmit to their children sound financial habits.”

Guidelines on financial education at school and guidance on learning framework

Explore the content

Why teach financial capability?

Complete the Plus Minus Interesting (PMI) chart to identify the positives from students developing financial capability, the negatives that exist with the current level of financial capability, interesting perspectives.


View a text version of this diagram.

Identifying the financial decisions your students may face

Tawa Intermediate
Students from Tawa Intermediate School identify the factors influencing the financial decisions they have to make.

What are some of the financial decisions that your students face, or that you might prepare them to face? (This will vary depending on the age of your students.)

Continue the list:

  • How much of their income to save?
  • Where to keep their money?
  • What to spend their money on?
  • When they should borrow money?
  • Which mobile phone plan to purchase?
  • How to manage a student loan?

Making financial capability information visible

“Parent/whānau involvement in their children’s education is crucial to improved outcomes. A key research finding is that school-home partnerships are critically dependent upon the agency of educators, their ability to avoid deficit or stereotypical characterisations of parents and caregivers, and their ability to initiate links, respond to, and recognise strengths within the diverse families of their students. Partnerships that align school and home practices and enable parents to actively support their children’s in-school learning have shown some of the strongest impacts on student outcomes.”

Quality Learning for Diverse Students in Schooling: Best Evidence Synthesis, p. 43

Making information regularly available about the nature of financial capability, learning what students are doing, and providing financial vocabulary helps parents and whānau to engage meaningfully with their student’s learning.

Continue the list of ways you can make information about financial capability visible and regularly available for students/ākonga, parents/whānau, and the school community:

  • school vision
  • curriculum overview documents
  • school newsletters
  • student awards
  • notice boards
  • school website
  • staff PLD
  • providing information in different languages, for example Samoan, Tongan, Māori.

Published on: 01 Dec 2013