A leading economist has praised New Zealand's two major political parties for supporting a financial literacy policy that'll help young people pay their bills in the future.
It comes after Labour leader Chris Hipkins announced on Sunday financial literacy lessons will become compulsory in schools from 2025, if re-elected.
The move has support from the National Party - who say the policy should have been introduced years ago.
Infometrics principal economist Brad Olsen told AM Early on Monday the policy is a crucial step forward for young New Zealanders.
But he believes a policy like what Labour announced should've been implemented years ago.
"This is fantastic news to hear coming out from the Labour Party and I think encouraging to see that after that announcement, National coming out and saying they would do it too," he said.
"There's not a lot of times I feel at the moment we give politicians bouquets rather than brickbats but let's be clear, this was a long time in the making. It would've been great to have had it done earlier.
"But seeing that commitment from both sides of the political divide really does highlight not only how important it is we get young people that training in those skills to understand and manage their own finances, but to ensure that it's delivered comprehensively through the schooling system rather than piecemeal."
Olsen said since the policy wouldn't come until 2025, if Labour is elected, it gives schools enough time to make sure they have the resources in place.
He told AM Early host Nicky Styris it's important that these lessons de-bunk some of the information youth have been learning on social media.
"It's important this reinforces in the classroom what goes on already at home and importantly counters some of what young people are learning, which is probably not all that correct from the likes of online sources, TikTok and similar," he said.
"There is some great content out there, but there's also some absolute rubbish and if we can get some good hard, cold facts to our young people so they have the ability to control their own destiny that's got to be a good thing."
While a policy like this might seem an obvious inclusion into New Zealand's curriculum, Olsen believes it's taken time for people to realise just how important financial literacy is.
Olsen believes financial literacy has become much more important after recent years with the COVID-19 pandemic and the cost of living crisis which has seen inflation and interest rates soar meaning the world is in a much more uncertain place.
So implementing a policy like this will help young Kiwis develop the skills to navigate and figure out how to pay their bills and save up for things they want, Olsen believes.
"We know only about half of young people think they're in control of their day-to-day finances, so if we can highlight to them how credit cards work, how savings accounts and loans and similar work, if we can introduce them to the eighth wonder of the world compound interest so that over time they can build those savings," he said.
"I think all of that will be quite important, just the basics of we can teach them how the tax system works, for example, it's that whole thing of you might have remembered Pythagoras theorem at high school, but if you can figure out how to pay your bills that's a pretty important one as well."
Olsen told AM Early the key to making this policy successful is applying the content young people are being taught to real-life situations they might be going through.
"If they're saving up for their first car, for example, what does that look like? If they're making payments day to day, if they're thinking of going to university or eventually getting a rental by themselves… playing with some almost real money in some bank accounts or similar to allow them to experience some of those realities as you go through life," Olsen said.
"How to make a budget, how to make your rent and your payments all go out on time, how to save some money. All of that using very practical examples, like you say, I think is a great way to ensure that people are ready for the real world."
Watch the full interview with Brad Olsen in the video above.
