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Fin-Ed Centre launches financial literacy courses

Monday, September 3, 2012
Fin-Ed Centre launches financial literacy courses

The Fin-Ed Centre (Financial Education and Research Centre) has developed a new series of certificate courses as a part of its continuing programme to help New Zealanders become more financially savvy.

The centre, which is a joint venture between Westpac and Massey University, is celebrating Money Week by producing a financial health checklist (see next page), and launching the ‘Fin-Ed Improving Your Personal Finances’ series of certificate courses. A second series of courses, designed for personal finance educators, is also in the pipeline.

“Our main objective with these certificate courses is to give people the tools they need for the life-long process of managing their finances,” says Fin-Ed Centre director Dr Pushpa Wood. “Personal finances do not remain static. You need to review your financial situation as your circumstances change, and according to the life stage you are at.

“If we can improve people’s financial knowledge, and give them the confidence to put that knowledge into practice, then I think we will set them up for a much more secure future.”

Dr Wood says the courses are designed for anyone in search of the skills and tools to take charge of their personal finances. The first course, ‘Understanding Your Financial World’, is now open for registration, and the following five courses that make up the series are ‘Your Pathway to Financial Success’, ‘Fundamentals of Managing Your Finances’, ‘You as a Consumer of Financial Products and Services’, ‘Your Financial Documents’, and ‘You and the Wider Economic World’.

The papers are complementary, but each can be taken on a stand-alone basis, and there are no entry requirements. The courses are taught by Massey University through distance learning, and are ideal for people who want to improve their financial literacy, but who do not want to undertake a full degree or diploma programme.

“If someone completes the whole series, they will come away with an understanding of their place in the wider economic world and have sufficient knowledge and confidence to ask the right questions about financial products,” Dr Wood says.

“They will also understand the difference between needs and wants, and good and bad debt, the power of regular saving, importance of reviewing their financial situation regularly, importance of planning for future and basic investment principles. They will also learn lots of practical skills like creating individual and household budgets and maintaining a spending diary.”

The Fin-Ed Centre’s Financial Health Checklist

Money Week is a good time to take a financial health check, says Fin-Ed Centre director Dr Pushpa Wood.

“Take the opportunity to identify your financial risk factors and put some plans in place so you don’t encounter major problems in the future,” she advises. “If you have mild chest pain now, it’s best to deal with it before you find yourself in hospital having a heart bypass operation.”

Dr Wood’s six tips for a healthier financial outlook are:

Create a diary to keep track of your spending, and review it to see if you are buying wants, rather than needs. “I carry around a B5 notebook in my handbag and do a quick, five-minute review at the end of each day. It can be very revealing,” says Dr Wood. She says major purchases should be planned for: “Young people, in particular, have to understand there is such a thing as saving for what you want. It brings greater satisfaction if you pay for items in cash, and you don’t pay three times the true value through taking on debt.”

You don’t need to have a lot of spare money to start saving. Every little bit helps over the long-term and it establishes a desirable pattern of behaviour that will hold you in good stead should you find yourself with more disposable income in the future. “It’s a myth to say it’s not worth saving if you can’t put away a substantial amount of money,” says Dr Wood. “Saving $5 per week is better than waiting until you have accumulated $100 before banking it – the temptation to spend that $5 on trivial items can be very strong.” It’s also important to have some sort of an emergency fund, or unexpected events like a broken washing machine or health problems can set you back for months, or even years.

Mapping out your expenses and purchases is the only way you can really see where your money is going. Once you understand that, you can make decisions about whether you need, or want, to redirect funds towards priorities. Dr Wood advises people to have a savings goal that will keep them motivated, and to clearly separate their fixed expenses like rent, mortgage repayments, and bills, from their discretionary spend. She also says it’s important to involve the entire family or household, and to think about how your financial decisions will impact on others.

“Your ability to generate income is the most important asset you have, yet income protection insurance is not top of mind for most people,” Dr Wood says. Too many people don’t plan for the possibility of illness, disability, or death. While these are not things you want to think about when you are healthy and well, it is very important for anyone with financial dependents to have arrangements in place. Life, health, critical illness and income protection insurances are all options to consider, and having an emergency fund – say three month’s income – can give you the option of accepting a higher excess in return for lower premiums on your insurance policy. “The key question you need to ask yourself is – can I afford not to?” says Dr Wood.

Dr Wood describes good debt as “something that will increase or enhance your net worth, like purchasing a house or investing in your education or further training”. She says that everyone should stop and consider the nature of the debt they are about to take on before making a major purchase. “Some debts, like medical treatment, are necessary, but for other items you need to ask yourself these questions: Do I need to buy this now? Do I have the means to pay this debt back? What will the true cost be after I have repaid the debt, and am I comfortable with that amount? And is it productive debt? If the answer to any of these is no, then walk away.”

“When it comes to your personal finances, you really need to plan at three levels – for today, tomorrow, and life,” says Dr Wood. “Today, you have to live within your means; you need to put money aside for purchases or unforeseen emergencies tomorrow; and it’s never too early to start planning for your retirement.”

The Fin-Ed Centre was formerly known as the New Zealand Centre for Personal Finance Education. The centre aims to help New Zealanders become financially empowered to achieve a better quality of life. Its other key projects include a longitudinal study to understand New Zealanders’ needs for financial knowledge at different life stages, and the quarterly Retirement Expenditure Survey in conjunction with Workplace Savings NZ.

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