1 yr. ago • 96%

Financial education has its limits – if we want New Zealanders to be better with money, we need to start at home

theconversation.com Financial education has its limits – if we want New Zealanders to be better with money, we need to start at home

Both major political parties have promised to introduce financial literacy to New Zealand’s curriculum. But is school really the best place to teach students about money?

TL:DR Studies on financial education show it helps increase savings rates, but has virtually zero impact on whether someone will default on loans. The article suggests that financial discussions at home are important.

Really though, the article is raising discussion points and doesn't really suggest what actions we should take (that I noticed, anyway).

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According to this article, education influences saving but not debt.

An important caveat is that these analyses measured the short-term response to hypothetical questions, not long-term behaviour.

But even when examining the impact of financial education on short-term behaviour, researchers found it was difficult to influence how people handled debt. Compulsory financial education did not improve the likelihood of getting into debt, or the likelihood of defaulting on loans.

Being educated can teach you what you should do, but if you're in a low socioeconomic group it doesn't magically give you enough money to do those things. You will still likely need a car and footwear (or a "grant" from Winz which is their word for a loan). Like the old truism says, being poor is expensive.

As for it being better to learn "at home" of course it is if the people at home know about that stuff but this comes across as a bit " let them eat cake."

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- As for it being better to learn “at home” of course it is if the people at home know about that stuff but this comes across as a bit " let them eat cake."
  
  I'm wondering if there's an intergenerational thing here. Teaching people about money doesn't help them avoid loan defaults, but does increase savings. Does growing up in a house where your parents are saving more, influence whether you need loans?
  
  As in, even though financial education doesn't reduce the chances of defaulting on loans, does it reduce the chances of their kids defaulting on loans?
  
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  Interesting question.
  
  I guess the other variable is whether financial education about debt is simply not as comprehensive as education about savings and investment. Which might be a factor insofar as middle class knowledge needs around debt may not be as onerous (for example, needing to know how to structure a mortgage, vs needing to know how to convert a monthly predatory lending fee into a p/a percentage).
  
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Really though, the article is raising discussion points and doesn't really suggest what actions we should take (that I noticed, anyway).

That's every article these guys put out, just a bunch of hand wringing with no firm conclusion. They take ages to get to the point, too.

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- Perhaps you miss the point of what The Conversation is about.
  
  Our mission is to share knowledge and inform decisions.
  
  Inform decisions, not make decisions.
  
  Typically, the stories are written by Academics not Journo's, and often they are written to just present some detail/facts, it is up to the reader to come to their own conclusion. I pretty much always find them informative, though sometimes, as in this one, much of the detail can be found in the papers/details that the story links to.
  
  I think you'll find the point/conclusion in the title.
  
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  It does explain a lot that these are written by academics, who are used to writing for other academics, but I think a lot more effort could be put into writing more concisely.
  
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- The Conversation is a platform for academic experts to write their own articles about things they are experts in. The unfortunate truth of science is that science is boring, and any interesting article about science is overplaying the significance of whatever it's talking about.
  
  Academics aren't entertainers, and they know that pretty much no study lets you draw definitive conclusions, so the articles are a little different from what others put out.
  
  They take ages to get to the point, too.
  
  I've read comments longer than this article. It seemed like a quick read to me?
  
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  This was a relatively brief article, at least by their standards.
  
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Best thing govt could do is stop blaming people. Companies get to expense their business lunches. They get tax layers to pay for their luxuries and we bail them out when they take high risks.

Govt blames majority when we have inflation and then in that same breathe blame the population for not spending enough and causing a recession. Almost like they have no idea how to run an economy.

People can spend more when they have more disposable income. Work on reducing the cost of living. Housing and food are the biggest pay check hits. Work on competition in the food market and breaking up monopolies that abuse the population. Fix the housing issue and regulate "house hoarders," "Land L**ds"

Bring the price of things down and people will have more disposable income to buy the things they want.

Edit

Oh and regulate predatory payday loans and high interest loans. You can educate the populace or you could just do your job and stop illegal scams.

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- Best thing govt could do is stop blaming people.
  
  I haven't seen the government blaming people?
  
  Companies get to expense their business lunches.
  
  Companies pay tax on profits. They buy a bottle of milk for $2, sell it for $3, and pay tax on the $1 profit. They get to take off the cost of running the business (e.g. rent, electricity, staffing) before paying tax. This all seems fair to me.
  
  Business lunches are part of running a company. But in fact, there are special rules about food and drink that mean in NZ companies can only claim half the cost. So really this is a weird thing to get hung up on since we artificially restrict how much businesses can claim.
  
  They get tax layers to pay for their luxuries and we bail them out when they take high risks.
  
  Can you give some examples?
  
  Govt blames majority when we have inflation
  
  When did they do this?
  
  and then in that same breathe blame the population for not spending enough and causing a recession.
  
  When did this happen? The reserve bank is intentionally trying to cause a recession.
  
  Almost like they have no idea how to run an economy.
  
  Even expert economists have no idea what they are doing, because economics is extraordinarily complex, with many different levers, and chaos theory in full swing.
  
  Bring the price of things down and people will have more disposable income to buy the things they want.
  
  That's not how that works. The more disposable income people have, the more things will cost. It's a basic principle of economics that companies will increase prices to the level the market is able to bear (i.e. how much money people have).
  
  Oh and regulate predatory payday loans and high interest loans. You can educate the populace or you could just do your job and stop illegal scams.
  
  The government has made big strides in this area over the last year or two. Payday lenders have significantly more restrictions than they did previously.
  
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- I'm not sure what you just said is really related to the story we're discussing.
  
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  Don't put the blame on people. Plenty the govt can do. Yes better finance education is useful but we also need to hold private forms accountable.
  
  Predatory companies need to be sanctioned and that will likely be more helpful that teaching better money management
  
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We need to start with this place and other places online. It's astonishing how little people know about the economy and how government finances work.

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