Learning to balance a household budget and understand interest rates will become compulsory for school children from 2027.
The government today announced it was adding Financial Education to the Social Sciences Curriculum.
Speaking at Tawa College in Wellington, Education Minister Erica Stanford said the lessons would start in Year 1 at primary school.
"If you think about young people in primary school, the types of things they will be learning are about needs versus wants, spending versus saving and as we get older and older introducing things like budgeting, finances, how to work out discounts, what interest looks like, what insurance looks like," she said.
Stanford said the policy was a pre-election commitment and the government believed financial education was crucially important.
She said some schools already provided financial education, but it was not consistent across schools.
Education Minister Erica Stanford with Tawa College students at today's announcement. Photo: RNZ / REECE BAKER
Stanford said the Retirement Commission had been working with the Education Ministry on the new curriculum and resources to support it.
Commission learning lead Yasmin Frazer said it was worth starting financial education young.
"There are actually really critical mathematics and social sciences concepts that need to be established quite early on. It's like the building blocks. How do you get to the point where you can work with a student on understanding compound interest," she said.
Frazer the introduction of a compulsory financial education could only be positive.
"Our early research says that probably about a quarter of the school population is receiving some form of financial education and that's not enough and also that financial education might not necessarily all be aligned to the curriculum," she said.
At today's announcement, Finance Minister Nicola Willis said some people ended school without the basic financial literacy they needed to make good decisions.
"That can result in people ending up in really difficult levels of debt. It can end up in them taking on financial obligations that they find themselves unable to meet and it can create real challenges for managing a household budget.
"So equipping kids with these skills early means that they will be able to make sounder financial decisions throughout their lives," she said.
Students in a Year 12 personal finance class at Tawa College said the subject was useful.
Bethaney Burtt-Mihaere said compulsory financial education was a good idea.
"It gets kids prepared for the future. In school you don't really learn much about this stuff and it's handy if you leave school and you want to buy a house or anything to do with money," she said.
Finance Minister Nicola Willis at today's announcement. Photo: RNZ / REECE BAKER
Lexi Najbert said some teens did not have a good handle on financial matters.
"There's just people who know, people who don't know. They just don't have those conversations at home," she said.
Samantha Te Awhe said students were expected to know about money management but often were not taught about it.
"The more you know about it, the easier it becomes."
Teacher Joe Bibby said compulsory financial education was a good idea because some young people knew very little about it.
"They know what they know. Some of them arrive and they've got everything because they've got it from home or they've had to learn about it because of their situation. Loads of them have got nothing. How can we expect them to have knowledge that we haven't taught them," he said.
"We all pick it up somewhere at some point but if they have it before they go out into the world, it's a lot easier for them and they can be a lot more confident about the decisions that they're making."
Bibby said schools were likely to have to reduce the time spent on other subjects in order to include financial education lessons.
"In education there's so much change, any time you do more of one thing you have to do less of something else... We'll have to see what's going to be reduced to make space for this," he said.
Principals Federation spokesperson Heidi Hayward said schools needed more information about the curriculum.
She said teachers were already dealing with a lot of curriculum change and adding something else was a bit tricky.
Hayward said it was not clear if schools would have to reduce teaching on other subjects to make room for the new content.
"It's really hard to know without seeing the detail. There's financial education in the mathematics curriculum already and many schools are doing it so it may be something that people just say 'this is largely what we're doing already' but it really depends what it looks like," she said.
Hayward said more families were living in poverty so financial literacy might look quite different in different schools.
"If you are trying to work out what to do with your savings and how to best invest as opposed to how you apply for grants and make sure that you can fill in a form and access what you need. There's a real nuance to what you would teach and how," she said.
Stanford said she did not expect teachers would struggle to find time to include the new subject in their schedule.
"If you look at all of these curriculum areas, it's all the way through. A small amount in every year in each thing built all the way through to Year 10 in a compulsory way is plenty."
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