Compulsory financial literacy in schools will change New Zealand's economic future

After nine years delivering financial literacy to over 350,000 school students, after endless hours advocating for its place in the curriculum with countless Prime Ministers, Ministers, and the Ministry of Education, it’s safe to say Christmas came early for us at Banqer. A statement that will ring true with the rest of the financial education and wellbeing sector, who have fought vallient fights of their own.

Finally, an election promise that just makes sense.?

Labour’s announcement to make financial literacy compulsory in schools is something that will resonate with nearly all Kiwi. This made more apparent by the fact that National was quick to ratify the no-brainer announcement, having their own intentions to shake up this space, as a driver of broader economic outcomes.

The reason this resonates with us is because most of us will personally understand the cost of not being financially educated. Or if we were one of the lucky few to learn the language of money as a kid, then we’ll understand the difference it can make in our ability to take charge of our financial future.

With the backing of both sides, it looks like this is happening. But as always, the devil is in the details.?

Unpicking the brief announcement, it sounds like the key difference between what the parties have announced may simply be speed, and who is at the helm.?

The question needs to be asked as to how effective the Ministry of Education will be at overseeing the delivery of a meaningful initiative. Unlike established core curriculum subjects, money is woven through every facet of our lives as adults, and poor ‘financial literacy grades’ don’t simply mean we miss out on a mention at the end of year prizegiving - the consequences follow us the rest of our lives through our financial behaviours.

Early sentiment online following the announcement has been surprisingly mixed. Questions are being asked about why this wasn’t done sooner (another question for the Ministry of Education), how schools can simply add another subject on, and whether this is actually the role of schools - or whether parents need to be taking greater ownership of this life skill.

For the former, that’s the wrong way to think about it, this doesn’t have to be another subject. We work with hundreds of schools nationally who prove that by integrating financial literacy into social sciences, mathematics, pastoral care, and the more obvious commerce subjects at the secondary school level. And at primary school, teachers blow me away with their ability to link money into nearly everything they touch .?

The precedent is there, and it’s impressive. Effective educators are making maths more relevant and practically engaging, motivating their students through real-world context, empowering them with the life skills they need today, and tomorrow. And they’re building financially curious and confident Kiwi kids.

As for the question of whether this is a job for schools or parents, having done this for a while now I have a deep understanding of the pervasive intergenerational issue of financial illiteracy. If you were never taught about money, your parents were never taught about it, and their parents were never taught about it, how can we possibly be expected to be the keepers of that knowledge and pass that on to the next generation?

What we need is a generational circuit breaker - and that’s just what this announcement is.

Reclaiming the language of money will be something that the next generation will cherish. And perhaps one day, decades from now, we’ll wake up and question why we’re teaching it in schools when parents are talking about compound interest with babbling babes. But until then - we need to leave it to the experts.

Of course, those experts need to feel like experts. Resourcing this initiative effectively will be critical to its success. Educators need the training, and tools to deliver what can feel like a complex, and technical subject.

We need only look abroad to the United States to see the results from their commitment towards financial literacy in schools. Initially prompted by the global financial crisis of 2008, 23 states have since legislated financial literacy in schools, or are working to in some shape or form. Three years after delivering these initiatives, Georgia, Idaho and Texas saw real world outcomes with credit score rises and delinquency rates fall.

So what will New Zealand’s real world outcomes look like? Higher employment? Greater homeownership rates? More innovation driving higher GDP?

What the outcome will be is yet to be written, and who will hold the pen is also unclear. But regardless, I’m confident that if education is the enemy of poverty, then financial education is the ally of wealth. And this announcement takes a bold step towards our future generations attaining wealth - whatever that means to them.