Most people (84%) know NZ Super is paid at age 65 (unchanged). More know that NZ Super is not income tested (up six points to 44%) or asset tested (up five points to 50%). About one in three (31%) know the amount paid to a single person living alone (no significant change). Knowledge about NZ Super increases with age.

 

When asked what a person needs to consider when they think about saving for retirement, there was a move away from lifestyle and spending (down five points to 75%) towards considering their current financial situation (up 11 points to 58%); and how long their retirement might be (up 10 points to 24%).

 

Most (81%) know what a budget is and three-quarters know that everyone can benefit from having a budget (no significant change).

 

There is a shift in why people say it is important to have a budget, indicating a move to tighter management of finances. When asked why it is important to have a budget, more say it is to control spending or pay bills on time (up four points to 84%); to plan how much to spend and save (up eight points to 43%); and to track where money is going (up five points to 38%). Fewer say the main reason for having a budget is to have savings (down seven points to 25%) or to achieve financial goals (down five points to 15%). 

There is a high level of knowledge about simple interest (86%), inflation (89%) and its impact on savings (81%), with no significant change from the previous survey. There is an improvement in understanding of compound interest in savings accounts (up eight points to 37%) and in term deposits (up five points to 58%). 

Mortgages 

The increase in internet banking is reflected in increased knowledge about the advantages – people say it is quicker (up five points to 43%); more convenient (up 13 points to 39%) and cheaper (unchanged 55%).

 

Almost all (96%) know they should not reveal their internet banking password to a friend, but half think it is alright to tell their partner (unchanged). Fewer people (down 5 points to 12%) thought it was alright to tell a bank staff member.

 

Fewer know how to minimise fees by using EFTPOS (down seven points to 60%).

 

Almost all (92%) understand the information on a bank statement (unchanged). 

 Almost all credit card holders (94%) know that paying the minimum amount means there is still money owing (unchanged). Three quarters of credit card owners know that paying off the full amount on the credit card each month would give interest-free days on purchases (no significant change).   Knowledge is lower amongst those without credit cards. 

When asked which is generally considered likely to make the most money over the next 15 to 20 years, more say a savings account (up seven points to 22%) while less than a third say a range of shares (27%, no significant change). 

 

When asked how to reduce risk, there is an increase in the proportion who know that capital guaranteed investments are a way to reduce risk (up five points to 49%). There is a fall in the proportion who say investing only in property will reduce risk (down four points to 15%). There is more uncertainty, with people saying they don’t know the impact on risk of diversifying investments (up four points to 18%) and don’t know the impact of changing from high risk to low risk investments (up five points to 13%).

 

When asked what factors to take into account when looking at investment offers, people are less likely to look at the returns (down five points to 61%) and more likely to consider whether an investment is secured or unsecured (up eight points to 30%). They are also more likely to look at the cost, both fees and minimum investment levels (up 14 points to 27%).

 

Most can still recognise signs of a scam, such as a promise of very high returns with little risk (88% unchanged). Fewer people think an investment offer would not be a scam if it were offered by a well known, reputable financial organisation (down six points to 81%).  

 

Most recognise that an investment with higher than average return is likely to have a higher than average risk (88%, unchanged). 

 

When asked about an investment advertised as having a return well above market rates, half correctly say it would be too good to be true (no significant change) while the same proportion would recommend investing lightly to ‘see how it goes’.

Managing risk 

Four in five (79%) know about the requirement for financial advisors to provide a disclosure statement (new question).

 

While 71% know it is important to find out how a financial advisor is being paid (no significant change) there is more uncertainty, with 13% saying they don’t know whether this is important (up five points).

 

93% know to ask about a financial advisor’s qualifications and experience (no significant change).

 

Almost all (97%) know it is important to read and understand the investment statement before investing (down two points). 

There is a range of knowledge of the meaning of financial terms (savings, term deposit, asset, liability, capital gain, net worth, secured loan and equity) and this has not changed significantly. The ability to correctly define terms ranges from two thirds being able to define liability up to 89% who are able to define savings. There has been an increase in the ability to define ‘real rate of return’ (up six points to 66%).

 

Around nine in 10 knew that gross salary means before tax (no significant change). 

There is an improvement in basic addition, subtraction and multiplication, as tested by questions about bank statements and savings. Looking at a bank statement, the proportion who could calculate the time it would take to save a set amount increased 13 points to 74%. There was also an improvement in the number who could calculate the amount available for saving in a given scenario (up four points to 80%).