Context:

In 2012, Massey University started a 20-year longitudinal survey to explore the financial knowledge, attitudes and behaviours of a cohort of young New Zealanders. The first study captured the baseline of the cohort, who at the time were aged between 18 and 22. The findings of the study indicated that their overall levels of financial knowledge were low, and there was a lack of formal financial education, meaning that parents were often a key source of this knowledge. Although the survey indicated that many young people were aware of good financial management, the study also found that they were not putting this knowledge into practice. Finally, the study found that young people were averse to debt, particularly in the form of credit cards. The current study explores how these viewpoints have changed over the last five years.

The study:

Massey University conducted the second stage of the longitudinal research in 2017, to explore how the cohort’s financial knowledge, attitudes and behaviours have changed over the past five years. The method comprised an online survey of the cohort, followed by interviews. Of the original 318 individuals involved in the first stage of the research, 232 individuals took part in the online survey, and 225 were interviewed.

Key findings:

Financial knowledge

• Objectively-measured financial literacy scores improved by 20% from 2012, although the subjective assessment of financial literacy decreased, with fewer participants classifying themselves as having a ‘good’ understanding of financial matters. The increase in the objectively measured scores may in part be attributable to more individuals having to engage in active financial decision-making. In contrast, the decrease in subjectively-measured scores may be down to individuals realising that their knowledge is limited in the face of having to make real-world financial decisions.
• Over half of participants (52%) reported having taken steps in the past 12 months to improve their money management skills, with their main sources of information being their parents (19%).
• The majority of respondents reported learning ‘nothing’ from formal financial interventions, such as financial planners, advisors or counsellors (73%). 60% learned ‘nothing’ from classes, working or seminars.

Financial attitudes

• Similar to the findings from five years ago, participants are confident about their ability to manage money, acknowledge the importance of saving, and are wary of credit cards.
• However, respondents had increased perception that learning about money management is of key importance.

Financial behaviour

• Respondents generally continue to practice their good financial behaviours, including budgeting, comparing prices when shopping and using their credit cards responsibly. However, many wished that they were better at saving.
• Participants reported that they focused mostly on the shorter term with respect to their financial planning.

Points to consider:

Methodological limitations:

• There was some attrition in the sample, with 86 of the original participants not participating in the online survey. In addition, seven people who completed the survey in the current study did not participate in an interview.
• In contrast with the original study, the researchers undertook the majority of interviews via a video conferencing facility. This was due to many of the participants being scattered around the world.
• The majority of the participants were aged between 23 and 27, although a small number were 22 or 28 due to the researchers undertaking the study at a different time in the year to the original study.

Generalisability/ transferability

• While aspects may be relevant to the UK policy landscape, its transferability may be limited as the findings pertain to the population of New Zealand.