spinofflive
(Image: Tina Tiller)
(Image: Tina Tiller)

MoneyNovember 3, 2021

Financial literacy should be taught in schools, not just on TikTok

Staff writer
(Image: Tina Tiller)
(Image: Tina Tiller)

More of our young adults are turning to social media platforms rather than their schools for advice on how to manage their personal finances. BetterSaver founder Joe Taylor believes they shouldn’t be left in the dark to sort out the reliable from the questionable.

TikTok, YouTube and Instagram are replacing school lessons as sources of financial information for young New Zealanders eager to learn how to handle their money better.

New data from digital KiwiSaver adviser BetterSaver shows social media platforms are more popular destinations for those 16 to 24 years old than their kura – more than a quarter of the 204 respondents listed social media as a source compared with the 19% who picked school. The vast majority (83%) turn to their parents for financial guidance.

When asked to define compound interest, only 12% could explain it accurately and three-in-five young New Zealanders don’t understand that diversifying your investment portfolio across multiple assets decreases your investment risk. Overall, 90% think their schools should teach them more about managing their money, followed by how KiwiSaver works and saving for a house deposit.

“We cannot leave our young adults in the dark to figure out what financial advice is good or bad,” says BetterSaver founder and chief executive Joe Taylor. “We trust schools to set our children up for success, but our research findings show that’s not the case when it comes to financial matters.”

Taylor, 35, founded BetterSaver in February 2018 after six years of advising clients of specialist investment manager Fisher Funds on the voluntary savings scheme. The startup provides accessible, expert financial advice while pushing for industry-wide change by advocating for improvements to financial literacy and “calling out the BS when we see it”.

Taylor says the foundations of making sure your money works for you should be laid at school.

“The fact that we’ve got young people relying on TikTok, Instagram and other social media ahead of the schooling system shows we’ve got some serious leg work to do.”

I spoke with him some more about doing your research, the risk of turning to “finfluencers” and playing the long game.

Kia ora Joe. Some 19% of 16 to 24-year-olds get their financial information from schools while 27% turn to TikTok and other social media platforms. Is it necessarily bad that young adults are looking to sources of information other than their schools?

No, I’m a big proponent of not taking what you hear from one place as gospel, doing your research and talking to many people. The fact is, New Zealand’s schools don’t teach these types of things as a core subject and it’s a core foundation for a lot of people’s lives.

I got a high school leaver’s package of resources telling me ‘This is how you budget’ or ‘this is how you open a bank account’. Until then, I hadn’t done accounting or economics, I had dropped maths in sixth form…

Well, maths isn’t going to teach you really anything about investing or finance anyway. Not the way it’s taught at school – ‘do some algebra and some trig’.

I was checking the school curriculum and while financial capability is highlighted as a skill, it’s taught in the context of specific subjects’ achievement standards. There isn’t a foundational course.

You’ve left school and you’ve got this pack and if you don’t understand the information in that pack [then] who are you going to talk to? OK, your family. But then your family actually might not be equipped either because they’ve never been exposed to it or they might think just property is the best thing and so you continue on that bandwagon like everyone else in New Zealand. And then that isn’t good for the country as a whole because then we’re just swapping houses between each other and not really generating any value. I don’t know, it’s a tricky one but I think schools could very easily do a foundational course. Why not give students packs a year or two out from leaving school?

BetterSaver founder and chief executive Joe Taylor (Photo: Supplied)

Something that interests me is the extent to which children learn their parents’ habits or attitudes towards money. Those attitudes or habits may not be good ones though.

That’s true for more than just money, right? Kids pick up a lot from their parents or their family and that doesn’t necessarily mean it’s good. While in the ideal world you’d look up to your parents or your family and get what you need, the reality is a lot of the times you don’t and they give you bad habits sometimes. It shocks me how much, I mean I think my parents were pretty good but it shocks me sometimes when I look at my dad and [I am] like ‘Crap, I picked up that from him obviously, it’s embarrassing’. We can’t expect parents to have all the answers and the other thing is we don’t in a lot of other cases. The FMA, the Financial Markets Authority, would have an easier job as well if people were schooled up financially because they wouldn’t be scammed or taken advantage of as much. The FMA’s got a big wing now on capability but you’ve got to think longer term with these things. Like, ‘OK, what are the foundational things that we can change in our society?’ And I think financial literacy would be huge. It’d just empower people. 

Most of the financial information on social media wouldn’t necessarily be tailored to New Zealand’s particular circumstances. I can’t imagine many TikTok creators are talking about how KiwiSaver works or how it could benefit people.

Not as a percentage of the content that’s on TikTok. Surprisingly, there are people who engage with us and they appear to be Kiwis [BetterSaver uses TikTok to communicate with some of its clients]. If we step outside of TikTok, there’s quite a lot of “finfluencers” – fintech influencers. There’s quite a few in New Zealand and that’s really neat, to see these people trying to make an effort because there’s obviously a demand. People are searching for this information if there are pages out there. But people’s investing and finances are really personal and what’s worked for you might not necessarily work for me. Your goals are different, your life situation is different and actually investing in something that somebody posted on TikTok, Instagram, Facebook, wherever – it might not actually be right for that person. So, [it’s a] danger.

Where would you ideally start to address New Zealand’s financial literacy?

I’ve started with BetterSaver – that’s what I’ve done. Why I started with BetterSaver is because there are over three million Kiwis with a KiwiSaver account and it’s going to be their largest or second-largest asset after their first home or their home. For us, this is a way that we can really engage with people over the long-term and we can talk to them about KiwiSaver and then from there open their eyes to other opportunities within the financial world and what you can do with your money. So, that’s where I’ve started. If I were in government, I’d start in schools.

You graduated around the time of the 2007/08 global financial crisis. How did that shape your understanding of finance?

It had a positive effect, especially [considering] the situation we’re in now. It showed me that – mind my French…Oh, I’ll give you a better quote than swearing. It showed me that, even when things are really bad, they’ll recover. And it just takes a bit of time with the global markets. It was awful then. You think of all the job losses and uncertainty and people [were] losing it. And then just a few years later, we’re cranking along, and then about 13 years later, we’ve got all this stuff. I’m actually very positive about the Covid stuff. We’ll rebound, we always do.

More Reading

    I’ve read a bit of history in the past – and gosh, that sounds bad – but I mean, we go through cycles. We have challenges always but humanity always seems to find a way. 

    At the top of your answer, were you going to say “when shit hits the fan”?

    Yeah, or shitshow or something! And that’s it, like, we’re fully in a shitshow right now. Nobody can predict which way it’s going to go in the short-term but I know in four years’ time we’ll be sweet. That’s said from a privileged position as well. I’ve got my pressures with the business and stuff. I could’ve picked a better time to do it but I acknowledge it’s said from a privileged position. A lot of people are suffering out there and that’s because they just could not foresee this. Whoever could?

    Keep going!
    (Photo: Getty Images/Tina Tiller)
    (Photo: Getty Images/Tina Tiller)

    MoneyOctober 29, 2021

    From brain drain to brain gain – and back again?

    Staff writer
    (Photo: Getty Images/Tina Tiller)
    (Photo: Getty Images/Tina Tiller)

    With living costs rising and wages worth less than they were a year ago, nearly a third of young New Zealanders are planning to move overseas for greener pastures. But higher salaries and bespoke work arrangements might just keep talent on our shores.

    What would stop you from leaving Aotearoa for a job overseas? A pay rise from your current boss? Not seeing whānau and friends for a year or two? Hokey pokey ice cream or a proper meat pie? 

    On the other hand, Australian dollars could be enough to make you leave, given a basket of basic groceries or a trip to the doctor here is getting dearer and our wages are losing value faster than those of Australians.

    Higher salaries, lower living costs, even cheaper housing – our closest neighbour is looking more attractive to the nearly one-in-three under 35s still planning to leave New Zealand in the next five years in search of better work.

    The data point is just one of a raft of results from trans-Tasman recruiter PersolKelly’s new workforce survey. Economist Tony Alexander has warned employers they should get ahead of the curve now by at least flagging the prospect of raising wages, or Australia will benefit from an exodus of talent two years in the making.

    “If employers think it’s bad at the moment, they ain’t seen nothing yet,” he says.

    Some 60% of the nearly 400 New Zealanders surveyed say Covid has changed their work priorities, ranking the option of working remotely (42%), better health and wellbeing support (44%), and increased salary (44%) as their top job-hunting considerations. 

    Yet on the topic of salary, only one in five hiring managers have heard candidates say they want a pay rise, suggesting a disconnect between workers’ self-worth and their desire for more money.

    Alexander says employers must address this salary blind spot. New Zealand candidates are shy about asking for a pay rise, yet if employers assume they are not interested in earning more money, those potential new hires may be lost elsewhere.

    “We don’t generally walk up to the boss and say ‘Give me a raise or I’m out of here’. That’s the American way. It’s a different thing, it’s psychologically damaging. The employer would think ‘Cheeky beggar’,” Alexander says. “The danger here is this: it’s psychologically easier for both parties if the employee just shoots through and takes a job somewhere else.”

    Wendy Hewson, general manager of PersolKelly New Zealand, says local hiring managers are on high alert for an impending wave of resignations as employees leave our shores once borders re-open. 

    The latest data follows other employment statistics putting pressure on employers to adjust if they want to avoid the anticipated “great resignation”. 

    “We’re very worried about that for our economy because Australia is just a short hop, skip and a jump [away and] pays a lot higher salaries in a lot of areas,” Hewson says.

    The global pandemic temporarily halted New Zealand’s “brain drain”, and instead transformed the trend of losing talent to other countries into a “brain gain” as talented expats returned home. But with 30% of those under 35 eager to leave, Hewson says employers will need smarter offers to keep a hold on staff as cookie cutter solutions won’t be enough.

    PersolKelly New Zealand general manager Wendy Hewson (Photo: Supplied)

    “If I were offered yoga sessions or gym memberships – I hate it, that doesn’t appeal to me at all. Give me a four-day week working 10 hours – I already work 12 hours so that’s like a doddle. Give me that. That really appeals to me.”

    Employees and employers can both capitalise on Covid’s upheaval. In-demand candidates can command more than one job offer, Hewson says, and bosses’ salary offers must be nearer the top end to remain in contention. That leaves what else is on the negotiating table.

    “What we hear is employees or candidates skiting to their friends about certain key benefits they get and those ones have been always ‘I get my birthday off’, ‘I get my work anniversary off’ or ‘I get every second Friday off’. Those are the sorts of things that people love to talk about – it’s not the dollars and cents because that’s forgotten so quickly. That gets it across the line.”

    The survey shows 60% of respondents would consider working remotely for a company based overseas (a figure that jumps up to 78% for those under 35).

    IT professional Fritz Gallardo prefers working from his home in Tāmaki Makaurau as he gets to have fun with his seven-year-old son in between virtual meetings with his bosses in Australia.

    “I usually tell my son ‘I have to go back to work now’ and he’d say ‘OK, what time will be your break?’ and then [I say] ‘maybe in another hour or hour-and-a-half because I’m going into meetings’ and [he replies] ‘OK, I’ll wait for you, Dad’.”

    Gallardo has reported to the Australian office of global software provider Cisco since starting in January 2019, and working remotely has always been a feature of his work.

    Before Covid-19 hit our shores, Gallardo would take his son to school before 8.30am, work from the office in Auckland’s CBD, leave at 2.30pm to do the school run and then resume working from home. Lockdown may have changed some facets of his daily routine – no school drop-offs or pick-ups so far, for instance – but he still has enough time in the morning to prepare for meetings with people working two hours behind him.

    He says he would prioritise having the option of working remotely if he were looking for a new job. “I become more creative when I work on my own, and then when I need to consult my superiors and my colleagues, the technology is just right there.”

    Gallardo’s experience shows it’s possible for others to take the classic work stint in Australia without having to leave New Zealand. Alexander, the economist, says our closest neighbour remains a “safety net” for those of us keen to gain some overseas experience.

    “With the huge demand for staff in Australia, the higher incomes versus New Zealand’s higher cost of living, high house prices etc, I think there is going to be a movement of people across the ditch. And so I would struggle to say to a person ‘Don’t go to Australia, everything’s going to get great in New Zealand’.”

    He recommends giving a move some thought, and letting your boss know you’re thinking about it “because it’s quite possible they could offer you far better pay and conditions than you think is possible”.