Financial Literacy

By Author: Workbaseorg
Total Articles: 17
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Research shows that around half of New Zealand's adult population has low numeracy and/or literacy levels. Although most can read, write and use numbers, many lack the skills to understand unfamiliar and technical information contained in banking and insurance documentation and product brochures.



People's struggles with financial literacy are made worse by the plethora of financial products and services. Often there are so many options and qualifiers that they cannot easily be understood or compared.



Financial literacy involves the ability to make informed judgements and effective decisions when using and managing money. Good financial literacy will enable people to:

• make ends meet

• keep track of their finances

• plan ahead

• make sound judgements when choosing financial products

• stay informed about financial matters.



Many financial sector organisations are taking steps to improve New Zealanders' financial literacy ...
... skills by using plain English in written communication, but they need to do more to embed financial literacy by explaining the key financial vocabulary and concepts. Achieving improvements in financial literacy will require financial institutions to:



• Do more to improve people's financial literacy skills (rather than simply focusing on increasing their knowledge).

• Do more to identify and remove the literacy barriers that complicated services and systems place on individuals

• Place a stronger emphasis on supporting and building customers' financial literacy skills.



Financial sector organisations have an opportunity to lead the market by reviewing and improving their own systems, processes and all aspects of customer communication.


Five financial literacy questions that financial institutions should ask themselves:



1. How confident are you that most of your customers understand the differences between your various accounts or investment funds?

2. Are you as confident that customers with English as a second language, and those with low literacy and numeracy understand frequently used terms such as: 'manual transactions', 'contribution holiday' and 'duty of disclosure'?

3. How easy do your brochures and website make it for customers to find out what happens if there is not enough money in their account to cover an automatic payment, or what happens if they are late in making a payment to you?

4. How confident are you that every customer will get a clear, simple and consistent explanation to the above questions from your staff?

5. How confident are you that your staff know how ask questions to check customer understanding? (Simply asking "Do you understand?" is not enough!

About The Author:


Workbase is New Zealand's most experienced service provider of adult literacy, numeracy and communication support. Find out more at www.workbase.org.nz