The OECD definition of financial literacy: "The knowledge and understanding of financial concepts and risks, and the skills, motivation and confidence to apply such knowledge and understanding in order to make effective decisions across a range of financial contexts, to improve the financial well-being of individuals and society, and to enable participation in economic life."

According to a recent survey carried out by the Retirement Commission, New Zealanders are world leaders when it comes to understanding financial concepts. Commissioned by ANZ Bank, the 2013 Financial Knowledge and Behaviour Survey placed New Zealand at the top of 14 OECD countries in the financial knowledge stakes. While Kiwis have a great understanding of key financial concepts, however, the survey also showed a clear lack of financial practice.

According to the Commission’s Executive Director David Kneebone, “The survey shows there is a gap between what Kiwis know and how they behave - the two don’t always go hand in hand... For example, when it comes to budgets, we found 85% of New Zealanders understand what a budget is, and 73% believe that everyone benefits from having a budget. However, only 61% of Kiwis currently have a budget. We also found that while 91% of adult Kiwis believe it’s important to have a will, only 59% currently have one."

In an effort to close these gaps, the FCP toolkit (Financial Capability Progressions toolkit) has been launched in order to integrate financial literacy with the existing school curriculum. When rolling out these new tools, Retirement Commissioner Diane Maxwell said “Financial literacy is an essential life skill and embedding it in the school curriculum makes absolute sense. We want young people to leave school equipped to make good decisions about money from an early age... We want them to be on the winning side of their decisions because they know the fundamentals and they know what questions to ask."

However, as the recent Retirement Commission survey showed, knowledge is clearly not enough when it comes to financial education. New Zealanders also need to put their existing financial knowledge into practice, through ongoing and task-oriented programs designed to change habits along with ideas. According to ANZ Bank, New Zealand's biggest KiwiSaver provider, emphasis should be placed on extending financial education beyond the classroom and into our everyday lives.

New Zealand was one of the first OECD countries to adopt a national strategy for financial literacy in 2008, ensuring we are on the right track when it comes to many aspects of financial education. However, in order to turn knowledge into action and extend theory into practice, additional community and workplace initiatives need to be developed alongside school-based programs.