Recently, the announcement of a proposed financial literacy policy for young people in New Zealand has sparked much attention. New research underscores the financial behaviors and challenges faced by young adults, especially with the emergence of financial products like “buy now pay later” (BNPL) services. As someone heading into young adulthood, I’d like to offer my perspective.
I believe that financial literacy should definitely be taught in schools, and I think that it is great that the subject is getting the recognition it deserves. Looking at my peers and myself, I reckon the state of financial literacy amongst teenagers isn’t bad, but it could be improved upon. I am lucky enough to live in a household where financial literacy is valued and often talked about, which has given me some exposure to the subject.
The proposed curriculum touches on several critical aspects of financial literacy: saving, investing, budgeting, financial management, setting goals and planning ahead, banking, credit, debt, insurance, income and taxes, consumer rights, and identifying and managing risks. These are all important topics, and will be very useful for teenagers and young adults in the future. This is because it will improve the knowledge and understanding of financial literacy in the general population, and it will help people be more organized in managing their finances.
Of late, the BNPL (buy now pay later) concept has been in the spotlight. While I’m not very informed on the subject, I get the gist of it. Essentially, BNPL lets consumers access goods or services in the present, but pay for them in the future, through a series of payments. Though BNPL purchases don’t charge traditional interest, additional fees can be placed on the purchase, such as late payments, or transaction fees.
When I am an adult, I believe that I will try to avoid BNPL purchases in most situations. My reasoning? I’d like to stay on top of my finances, and make any purchases outright, rather than putting myself in debt. In September 2023, Auckland University of Technology published a study indicating that many young adults use BNPL sensibly, but 20% show problematic use patterns. This shows that there may need to be extra emphasis placed on BNPL services when teaching financial literacy.
While financial education in schools can boost confidence, it doesn’t always improve decision-making. I think this shows there’s a gap between just knowing about financial literacy and truly understanding how to apply that knowledge in real-life. I believe an effective way to teach financial literacy would be through interactive learning, such as gamification (like money management games), interactive workshops, and simulating real-life situations, which would allow students to practice their decision making skills.
Surprisingly, recent studies highlight that a number of young adults, even with financial education, don’t see BNPL as a form of debt. Having better financial education in schools may address this by spending additional time looking into borrowing money and debt, and encouraging students to think deeply about how they use their money.
As a teenager, I think the most relevant financial topics for my age group are: saving and investing, and planning ahead. These topics would be very beneficial to a teenage audience because the earlier you learn these skills the better.
Teenagers often don’t think too much about spending, so learning to save and invest early is crucial. After all, the sooner you start investing, the better. Planning ahead is also an important skill to learn early because this will let you plan out your future, and really think about how you are managing your money. Saving and planning ahead would also help to prevent impulse buying, and getting into debt early in life.
Overall, I believe the introduction of financial literacy into the curriculum will be a positive development.
While some teenagers have a basic understanding of financial matters, there’s room for improvement. I’m fortunate enough to have exposure to financial topics at home, but many other teenagers don’t. The proposed curriculum covers foundational topics and addresses emerging issues like BNPL services, which can be risky if not understood. Introducing financial literacy in schools is a big step towards giving teenagers and young adults essential life skills.
Jordan is a high school student in Dunedin, New Zealand. He loves writing across a range of genres, from zombie fiction to articles about financial literacy. Outside of school, Jordan is happiest on a cricket field, in a forest photographing fungi or playing video games with his friends and younger brother.