So in case you missed it, this week Statistics New Zealand released June 2015 data which shows that, when examining household net worth, the top ten percent of New Zealand households account for almost half of total wealth, while in contrast the bottom 40 percent hold 3 percent of total wealth. Whichever way you spin it (and some economists have tried to spin it!) the growing divide between ‘the haves’ and ‘the have nots’, cannot be a good thing, for anyone.
Now bringing this home, I have a confession to make. It wasn’t until I was 24 years old that I found out what household net worth was, let alone how I could calculate what mine was. 24! By which time I had already been working (at least part time) for nine years, already had a massive student loan debt and already had HP debt up to my eyeballs: yet my financial literacy was relatively elementary.
And I suspect that this is likely the case for a number of New Zealanders throughout the country from many different backgrounds and many different age groups. I mean, how many people do you know who regularly (perhaps monthly) sit down and calculate what their household net worth is at any given moment in order to make critical financial decisions about their life?
I can definitely say that since I started doing it, my family circumstances and the financial decisions underpinning those circumstances, changed and improved dramatically. Money does not create happiness – and importantly is only one of the many factors that contributes to wealth-creation – but not having enough money to survive contributes to a number of stressors that can contribute significantly to unhappiness.
So at 33, nine years on – with a bit of discipline (and ALOT of sacrifice) I’ve paid off my $30,000 student loan, saved a house deposit with my husband, am contributing to my super regularly – have growing savings and Kiwisaver accounts for both of our kids (that we contribute to regularly), emergency savings – and am now building our first home – in Auckland. Now none of that makes us rich and anyone who knows me will have seen us driving around in a beat-up nissan pulsar (which was given to us by a friend), knows that I rarely buy new clothes, and that we don’t go on overseas holidays regularly – but all of that has been short-term sacrifice made for medium to long-term gain. And the most important thing for me is that if anything happens to my husband and I, I want our children to have security and the tools and skills to know how to create their own security.
Other things that I committed to nine years ago were to: read as many books on wealth creation as possible (all from the library: to save money!), got as much free advice from people as I possibly could (and importantly listened to and considered different perspectives: but consciously didn’t take every bit of advice as gospel), taught myself how to use Excel and developed a system of record-keeping and accounting that suited our family circumstances – and stuck to it.
When I reflect on my journey in the context of Statistics New Zealand’s analysis (where I see myself as being somewhere in the middle – i.e. in the gap – where most people should be), I cant help but reflect on the wider systemic factors that contribute to income inequality in New Zealand which in turn creates poverty. The critical question for me is: why is financial literacy not a fundamental part of our education system in New Zealand? Why in the context of a society where more and more people seem to be struggling, is the government cutting funding to critical Budgeting Service providers?
Being a part of a functioning healthy society is not about playing a zero-sum game! And that’s the point, we need to change the game. It’s time to challenge the economic hegemony through a process of emancipation that makes room for everyone – and here is the radical thing: I think it’s very possible for this to occur within a capitalist system. Wow, that’s a huge statement for someone like me to say (who most people would probably ‘categorise’ being within the socialist spectrum). But the fact is, we live in an age of late capitalism whereby the culture of capitalism, whether we like it or not, is integral to societal norms and infrastructure (i.e. shapes EVERYTHING around us). And actually I don’t have a problem with that, what I have a problem with is the fact that as a result of a lack of investment in financial literacy a large number of people in our society (from all class backgrounds) remain ignorant about the ins and outs about how money ‘works’ – that’s the zero-sum game part of the equation that I want to change.
And I will change it. Even if it’s only by challenging the status quo and encouraging a few people who read this to enter into this dialogue and start their own journey of emancipation. Even if it’s only through advocating for Budget Service providers in the #Whau and West Auckland to continue to be supported. Even if it’s only through teaching my own children how to budget and save. I will change it. And I believe each and everyone of us who commits to change, can and will make a difference.