Be aware, be very aware

You may not know it but this is Financial Awareness Week  , an initiative of the Institute of Financial Advisers (IFA).

The week began with the release of an Enterprise New Zealand Trust  survey testing the financial knowledge of high school children.

Unfortunately, the children failed. They didn't know much.

"It is concluded that at least half of New Zealand senior secondary school students have a poor understanding of their personal financial management and knowledge levels," the survey found.

Which I thought was a surprisingly good result but apparently it's below international standards. The upshot of the research was that children should be taught about finance in schools and, even though some of the survey questions were questionable, it's difficult to argue with that conclusion.

At 100-plus pages, there's quite a lot of academic sludge and statistical mumbo-jumbo to wade through if you want to see how the report's conclusions were justified.

But I warn you against that. You will come across phrases like this: "Having financial knowledge equips people with the capability to make wise decisions and is fundamental to being financially literate."

And also I discovered in the report (tell me it's not true) that the Education Department divides up New Zealand into the regions - North North Island, South North Island, North South Island and South South Island.

But I suppose you have to bear in mind that this report is about financial literacy and not literacy literacy. And on that score the report does its job.

My contribution to Financial Awareness Week was the purchase of a second-hand copy of J K Galbraith's classic 1975 book 'Money: whence it came from, where it went' for 50 cents. A quick check of the internet will reveal that Galbraith tends to divide economists but I'm getting my money's worth out of the book.

As one of the many, not all positive, reviewers said of the publication, Galbraith has the "urge to make the world clearer".

"The whole book is quite admirable in this way... Galbraith's Money is a terrific read. A lot of what Galbraith says makes perfect sense, and I have a much better picture of how monetary policy works."

But Galbraith was no use in coming up with the answer to question 2 in the teen money survey:

2. Bill and Rob are employed by the same company and earn the same pay. Rob spends his free time taking work-related classes to improve his computer skills; while Bill spends his free time socialising with friends and attending movies. After five years what is likely to be more true?

a) Rob will make more money because he is more valuable to his company

b) Rob and Bill will continue to make the same money

c) Bill will make more because he is more social

d) Bill will make more because Rob is likely to be laid off

 

David Chaplin