Understanding Finance Through Education

The concept of financial literacy is to be able to make informed and effective decisions in regards to money management. The final goal of promoting such literacy is personal financial well-being. Through a number of venues, New Zealand financial literacy education can be taught to deliver objective, generalized information on issues regarding finances. Financial education is aimed particularly at those who currently have a limited understanding of money and are experiencing limited financial means.

The government in New Zealand promotes the cause of New Zealand financial literacy. Other countries that are also heavily involved include Australia, Canada, Ireland, the United States, and the United Kingdom. All these countries have astute investors who actively engage in offshore hedge funds. The Capital Market Development Taskforce has pinpointed the need to teach financial literacy and investing as a particularly essential measure at this time. Compared to other economies that are a part of the Organization for Economic Cooperation and Development (OECD), New Zealand’s capital markets are quite small. Based on the saving habits of the residents of New Zealand and the fact that direct investment in capital markets is so limited, New Zealanders may have a limited understanding of these topics and how legal private placements relate to offshore hedge funds. This is why the task force is interested in improving the level of financial literacy in New Zealand.

The state of New Zealand financial literacy, when compared to the other countries that have a focus on financial education, is well positioned. While other countries have a greater focus on financial literacy schools, there are no significant gaps in the kinds of informal financial education that the country delivers to its citizens. In fact, the usage of non-school literacy initiatives in New Zealand is higher than in any other country. However, evaluation of the effectiveness of these financial literacy programs is inherently challenging. As of now there is no model used to measure the improvement of financial well-being that leads to greater activity in the prime brokerage and capital markets.

There are several strategic methods that can be implemented to expand the level of improvement seen in New Zealand financial literacy education. First, a greater emphasis on teaching financial literacy in schools could be effective. As a mandatory part of a school’s curriculum, the prominence of financial literacy would really begin to take shape. Since the concept of investing is weak in this country, a new campaign with a focus on investing could be created. All these methods would lead to greater financial understanding, confidence, motivation to invest, and financial freedom.