Fundamentals of financial literacy – ‘thanks Mum’.

For many people the fundamentals of finance are as abstract to them as mathematics is for me, when calculus and algebra are introduced in discussing mathematical problems. Numbers represented by letters (algebra) and rates of change (calculus) whilst grist to the mill for those inclined (age and gender being irrelevant) are a complete mystery to my way of thinking. I was forced to ponder and guess for school certificate mathematics and enjoy the singing of French songs for school certificate French – but my mind was elsewhere. Sport, girls, money, music and alcohol, not necessarily in that order. I scraped through school C but not in French or mathematics.

I’m not sure therefore that school or education around finance at a young age is necessarily an answer. Those topics I did enjoy at school were usually accompanied by a teacher I liked and one who’s capability to impart knowledge was superior to another. I didn’t immediately choose University for the same reason. The learning style seemed boring and impractical, the relevance therefore unconvincing.

On the other hand Mum taught us how to count change (there were no cash registers in those days – 50’s/60’s) add up in our heads and value money as a means of exchange. This was pre decimal currency and Mum was a hard task master. We also learned to count the money from the ‘till’ at the end of the day, weigh up margin (the difference between a packet of cigarettes or profit from the ‘penny machine’). How to select tunes for the Juke Box that were most popular, book accommodation for shows at the Town Hall (Howard Morrison Quartet, Johnny Devlin, Selwyn Toogood) and market the seats when numbers were light. She taught us communication in the shop (milk bar / Café / Taxi Stand) and on the phone. How to book fare paying customers for our four cabs and manage the radio telephone. We did all this as kids – before High School. I was luckier than my older sisters (being Mum’s favourite) and didn’t have to do the hours they did – but as I reflect, she taught us well. But how we applied it, differed markedly. I watched as she dealt with suppliers, accountant, lawyer, bank manager, building society representative and Maori land court. I saw the investment she made in the shop before it became main stream (coffee percolator, ice blocks on sticks, Easter eggs decorated and hot milk shakes for the rugby players after practise). I saw the property she bought in Hataitai Wellington for one of my sisters when we lived in Foxton. I saw the hair dressing salon she decorated and financed for my other sister. I saw the lending she provided to other Foxton retailers. I watched and learned form a master at work – she died too young but not before she got me into finance. Dad liked money but he just kept it in his pocket.

After 40 years from 1967 (with a few years out in an alternative industry) and a foundation of 18 years from a financial whiz, I’m convinced that the nurture was critical for me but both sisters had the same demands upon them – perhaps even more so. Neither has the same attitude to money as me, and both are now single and living solely on government super. Something which I see with many older women. I’m sure for their 40 odd years of marriage the financial decision making was placed in another’s hands.

What I see after my time growing up, banking, insurance and financial planning is a transition in sharing roles for couples who are clients of mine but not necessarily an ‘equality’ around financial control, confidence to make investment decisions or the understanding of insurance needs. That’s not to say that overall financial literacy has improved over the last 40 years – I think the opposite. It’s worse. One only needs to see the outcomes as I do in dealing with the unintended consequences of poor financial decision making which I’m convinced is an outcome of a basic lack in the fundamentals of financial knowledge. Both genders are struggling with feelings of inadequacy and anxiety around money, experience relationship stress when discussing income and expenditure, missing financial opportunities, suffering ill health and chemical dependency, have a burden of debt, suffer conservatism with where they place money or are naively optimistic and focused to retail therapy as a short term fix.

The job then is for the financial profession to intervene, to be a catalyst, to communicate with individuals, couples and new business owners when needed. To do that they need to be trusted and therefore referred – either through work place workshops or from friends and family. Whilst some education at grass roots could be useful I think the teacher appears when the student is ready. I’m grateful that Mother took an interest in what was to become my passion – at an early age. But not everyone is ready when young – it’s the timing and method that’s important, and the quality of the messengers.

What people need when they find the teacher is the ongoing guidance to smooth the road and to get back on track as they drift from stated goals. Someone to guide around the pot holes of life, arrange the appropriate ‘Sherpas’, measure progress and re evaluate objectives. These are hard to achieve over 30/40 years of accumulation and living – then 30 years of investing in retirement. Spending ones fruits of investment in going to exotic places with the person they want to walk through life with, seems to me, a pretty positive reason for taking an interest in how to achieve it.