Why Kiwis are bad with money and what we can do about it

For the last 3 years, I’ve been working at a Kiwi Wealth backed startup called Hatch. We created Hatch for people like us: Kiwis who want to do better with their money, without having to deal with the jargon, complexity and distrust the investing industry can be known for.

As part of my job, I’ve been doing a lot of research into our money habits. After talking to hundreds of Kiwis, I agree that many of us are clueless and deluded about money. I think we’re forced to be.

Lack of quality financial education aside, look around: what options do you actually have for your money? Independent advice is scarce (and expensive!), the share markets feel like an old boys club, finance companies have a reputation for going bust, and property continues to become less affordable. The only option we seem to have left is to put our heads in the sand, our money in a savings account, and assume somehow she’ll be right mate.

We’re saving ourselves poor

A lot of us have far too much money sitting in savings. The word ‘saving’ is probably inaccurate as well – these days it’s really ‘storage’. Interest rates are so low that inflation wipes out the pitiful interest we earn – as the cost of living rises every year, the money we’re diligently saving is simply not keeping up. If you are earning 1.5% interest and inflation sits at 2%, you’re literally saving yourself poorer.

Savings accounts do play a valuable role – they are a great place to store money you may need in the near future. The problem is, we’re using them as a one-size-fits-all solution, and it’s costing us.

It’s extremely hard work to be bad with money.

Here’s the kicker: we’re working harder than ever, for longer than we should. We sacrifice quality time with our families, struggle to balance work and life, and spend sleepless nights worrying about the future. It’s stressful, it takes up too much brain space, it causes fights and leaves us stuck in jobs we don’t love.

And yet, somewhat ironically, the idea of getting our hard earned money working hard for us is the thing that feels, well, hard.

Change starts with access to quality investment options

When we launched Hatch 2 years ago, our initial goal was to give New Zealanders access to quality ways to put their money to work. We were the first to allow everyday Kiwis to become shareholders in some of the world’s most innovative companies. Since then, over 50,000 people have signed up and own shares in companies from Tesla, to Apple, Berkshire Hathaway, Google, Beyond Meat and 3,000 or so other businesses we know and use every day.

Access is great, but what we really want is to help New Zealanders make a real difference to their futures. That life you imagine after winning lotto? That’s what investing your money can help you achieve. We like to think of it as getting rich slow.


Good returns, bad reputation

Phrases like “only invest money you can afford to lose” drive me crazy. Our KiwiSaver accounts are full of money we can’t afford to lose, and most of it is probably invested in shares. That’s a good thing! Over the last 100 years, the share markets have grown investor’s money by an average of 10% a year. That growth is why your KiwiSaver balance goes up far more than the amount you put into it. It’s also why your balance sometimes drops – an average of 10% a year isn’t the same as 10% every year.

It’s time to stop thinking about investing money you can afford to lose, and start investing money you won’t need for 5-10 years.

The share markets are not a casino

These days, discount share trading platforms are cropping up all over the show – making it very easy and very cheap for people with no experience to dive in and start buying shares. Good? Bad? No one knows yet, but the 1980s give us a bit of an idea.

Because Hatch is part of Kiwi Wealth, we’re not trying to maximise short term revenue, or attract new funding rounds, we are trying to solve a big problem. It’s easy to see why the share markets appear to be another outlet for gambling. Chucking $50 in to buy shares in a company just because the price is rocketing up, well I can see why it feels like betting on black.

But that’s not putting your money to work, it’s a lottery.

Two straightforward ways to start putting your money to work

Here’s the conundrum: You make buying shares sound like an effort, and a lot of people will never get started. You make it sound too easy, and it feels like gambling. Fortunately, there is a middle ground – straightforward ways to start, without acting like a drunk at a Blackjack table:

Learn by doing

A lot of Hatch investors take a small amount (say $100) from their savings and use it to buy their first shares. They don’t think of their first purchase as an investment, instead, it’s an affordable education in the mechanics of buying them – which incidentally is just like online shopping. $100 is not going to get you rich, but it may change your life. Once you own shares in a quality company, everything changes. It’s amazing how more interested you become in learning about good money habits when you become a shareholder in a business you believe in.

Start by learning

If you’re like many other Kiwis and prefer to get your head around the basics before beginning, Hatch makes that easy too. We’ve created a free online course so you can learn everything you need to know to buy shares. We deliberately made it easy to fit around real life – you can complete it in just 10 minutes a day, over 10 days. We break down the concepts into bite sized chunks and let you take one small action a day so, by day ten, buying shares feels like a small step to take.

Take ownership over your money

A focus on education is a weird path to forge in an industry that’s having a glamour moment. It would be much easier to jump on the bandwagon of ‘buy now, the going is good!’, but we’re doing it for a reason. I genuinely believe the best time to start is today, but I also know the best way to start is by taking real ownership over your money. And that means knowing what you’re doing with it.

Hatch investors tend to be over 30 – savvy, ambitious Kiwis who know that investing their coffee money won’t lead to their dream lifestyle. So turning that first $100 investment into a serious portfolio is the next step. The good news is we spend a lot of time creating straightforward, entertaining and educational information to help you grow your nest egg in a way that works for you. When you understand what you’re doing, it doesn’t feel like gambling, it feels like a sensible investment in your future – one that doesn’t require a scarified lifestyle today.

Be better with money

The reason people stick with savings is because they feel like they know how it works. My feeling is they don’t. Your money is still being put to work, but the bank is the one benefitting. We should change that.

Not by gambling on share prices, but by taking a little time – probably less than what you already spend thinking about money, and learning about shares. Not throwing your life savings into the markets, but drip feeding amounts in and building up a quality nest egg over time.

We get messages from people every day about how investing in shares has changed their lives. Mortgages have been paid off, holidays have been had, families have started learning together and confidence has grown. None of these people got there by having insider knowledge, or day trading their way to success. They just put in place a seriously straightforward plan that worked around their own lives, and stuck with it.

If you’ve made it this far and want to give Hatch a try, our Wellington based team are on hand to help with any questions (nothing is too hard or dumb!). I also have a referral code too, which will give you (and me) a $10 NZD top-up when you sign up and make an initial $100 NZD deposit.

Getting out of our seats and off the boat

The man who opened the Women of Influence Awards last night spoke about how our earliest Wahine sat through their journeys to New Zealand. Only males were allowed to row.

He looked out at an audience full of trail blazers, misfits, disruptors and survivors and said “look at you now, you are the navigators of our country”.

Of course, because it’s 2018, New Zealand and an event celebrating women, another man finished the night by telling a top female executive that ‘the problem with women is they lack the ability to lead’.

In these crazy times, it really shouldn’t be surprising that with these two, unintentionally profound statements, it was men who got to the heart of the issue of women and leadership. Michelle Duff puts it this way:

“The ultimate end-game of feminism was not and has never been to simply slot women into all the positions of power currently held by men. The idea is not to uphold the structures that already exist.

It is to tear them down.”

It’s been 125 years since Kate Sheppard secured the signatures of a quarter of all women in New Zealand and made us the first country in the world to give women the vote. I suppose the hidden detail in this story is that it happened in a time when courier pigeons were considered an efficient mode of communication, when there were literally no women in parliament to get on the team. Damn right, it was a powerful display of leadership. But when Kate threw out the playbook, she gave us a much more powerful lesson in what happens when women lack the ability to lead like men do.

Of course some people struggle to see women as leaders, our approach is virtually unrecognisable. And it has been unrecognised, even by us, for far too long. Thank god we can finally say goodbye to the days women felt they had to ‘act like men’ to get to the top and embrace everything that happens when women lead like women.

A revolution is happening and when you know where to look, you’ll see it everywhere.

You’ll see our Governor General acknowledging the failures of her generation to fully grasp the gender battle they were fighting. “We thought things would change – it was just a matter of time. We now know that we were wrong – or at least too optimistic”. Female leaders don’t see failure as a sign of weakness, they get strength from talking openly about the lessons they learned along the way.

You’ll see an award winner walking onto the stage arm in arm with two friends. Her name is on the trophy but the success is shared. I can’t think of a better showcase of how women lead through lifting each other in the good times up and holding each other up in the bad.

You’ll mistake vulnerability for a lack of confidence. You’ll judge a woman for being too emotional, then watch her change the entire atmosphere of a board room using those same emotions.

Yes there is a problem with women and leadership, but the problem isn’t with women, it’s with leadership. That narrow definition we’ve all subscribed to for far too long is being forcibly expanded and traditional leadership structures are finally starting to collapse under the weight of women doing things their own way.

The problem with women and leadership is this: We don’t want to take over the navigation of this boat. We want to build a new one.

Reducing the gender pay gap

Apparently 80% of the 12% gender pay gap in NZ ‘can’t be explained’… Which is weird, given since the latest stats were published, Ive heard plenty of explanations:

“Oh well, in those top, top jobs, it takes a certain personality type. Im not saying its a good type, it’s pretty aggressive, you know. Not very focused on soft skills…”

“I suppose it depends what side the stats came from. They differ depending on who does them.”

“Well equal pay for equal work is great, but maybe its just that some people get to the top of their pay scale because they are better? How do you ensure people are paid fairly?”

I think I’ve kind of had enough debating. We’ve been debating for years. How many times do the stats need to show that there is a pay gap and it’s caused by deeply ingrained ideas about gender? It’s not #allmen, it’s not even just #onlymen, it’s all of us and we have proven that we wont fix it just by talking about it.

More and more research has come out explaining unconscious bias, it pretty much nails the reason it’s impossible to change by talking about the gap:

“Most of us believe that we are ethical and unbiased. We imagine we’re good decision makers, able to objectively size up a job candidate or a venture deal and reach a fair and rational conclusion that’s in our, and our organization’s, best interests. But more than two decades of research confirms that, in reality, most of us fall woefully short of our inflated self-perception.”

So, let’s stop talking and just start acting. Worst case scenario, we’ll learn faster what wont work. Here’s 3 things I think we can do immediately:

1. Do an organisational diversity stocktake

Many years ago, I did some work for a Government group working to address the gender pay gap. One of their big findings was that people genuinely believed they had a 100% neutral hiring policy, the gender pay gap and gender stereotypes were not an issue in their organisation. This group offered workplace reviews and almost without fail, they found bias.

It’s not because people are bad and undervalue women, it’s because our brains use unconscious bias to create shortcuts when faced with millions of pieces of information. My mum was working when The Equal Pay Act was passed. When she started her career, it was expected that women were not the bread winners and it *made sense* to not pay them as much as men. In her lifetime, gender roles have changed so dramatically it’s almost impossible to really know how far our subconscious has moved forward and what assumptions our brains still make.

But if we live in a world of unsubstantiated assumptions, we don’t know what needs fixing. So create transparency, prove your organisation is as neutral as you think it is. Be the standard others aspire to. And if the results aren’t as clear cut? Well proceed to step 2.

2. Turn the tables. Justify why you didn’t hire or promote a woman.

Got a board, organisation or role made up of more than 50% males? Then do like PledgeMe did and hire a woman next.

Actively looking to fill a diversity gap may feel controversial. You may get asked why you don’t just hire the ‘best person’ for the job. Well, Anna answered that question for you too:

“Often that ol’ “most skilled person” line is used to justify the default stale, pale and male approach. This response indicates a belief that there aren’t women with those skills. It also shows an unconscious bias from the person using it. Like being on a board is akin to a mission to Mars where only rocket scientists need apply.”

I’ve heard a lot about the genuine desire to get more women to the top, except women haven’t been promoted fairly in the past. There is no one in the pipeline ready to go. Put them there. Make it organisational policy to know your company makeup at different levels. If there is an imbalance, and you hire someone who doesn’t address the imbalance, then the inability to find a suitable woman needs to be explained.

3. Check yourself

I talk a lot about all the things that feel so unfair about being female. The expectation that our last names are borrowed, that we will be the primary caregiver to children, we have to negotiate carefully to not appear ‘aggressive’, that we have to be careful when we earn more than partners to not undermine their confidence… The list sometimes feels endless.

A friend of mine made a really good point about the frustrating nature of negotiating gender roles during wedding/baby/career progression. We have been planning this stuff for years, but it is only now we are having conversations with the men in our lives about our roles. It seems shocking to me how many men genuinely haven’t questioned why women change their names when they are married, but her point is ‘why would they?’. It takes a huge level of empathy to spend time contemplating a social norm that doesn’t adversely affect you. We arrive to court with armfuls of evidence and face an opponent who hadn’t even been aware a crime was committed.

So, I get it. But I think we all need to try harder at actively contemplating social norms. We do a million unconscious things every day, we let a million things slide, we say things flippantly, we don’t stop and question why. We should do it a lot more. We should be actively paying attention when we are faced with a female CEO, male nurse or any situation where traditional roles are reversed or changed. We should be paying attention to our immediate reaction. We should be comfortable acknowledging that ALL of us will catch ourselves feeling some feelings that sit outside our conscious beliefs. And we should start working on them.

What’s your five word summary?

Sometimes, it takes me 5 pages of documentation and a lengthy chat to decipher what it is a particular business actually does. I figure if I don’t get it, then chances are the viewers of the website I build for them wont get it either.

Sometimes I feel thick because I have to ask a potential customer so many questions, part of me just wants to nod along and pretend I know what they’re up to so they’ll feel comfortable spending money with me. But another part of me figures that if a business is making me feel dumb and intimidated because I don’t get what they do, surely they aren’t marketing themselves very well.

Publish a five word summary puts in very concise words one of the biggest things I think businesses need to offer to their customers and WHY it’s so important.

“Summarise what your organisation does in 5 words.

Now put that in a prominent position on your website.

Don’t bury it several levels down in some sub-menu.

Don’t write 50 words, or 150, or 500 (though you can do that in addition to the 5 words).

Visitors come to your website for many reasons. It may be to read all your wonderful information, but it also may be to quickly summarise what you’re about, grab the link and pass that information along to others in a blog, training materials, news item, email or even on a phone call or in a text message.

The harder you make your visitors work, the less likely they are to tell others about you.”

I realised this very early on after starting a blog – the 5 word summary of what the blog was about appeared in every review and directory listing people gave us. They just copied and pasted it. We made it so easy for them to spread the word about us, they just did it.

I also notice it when talking to people about what we do. If I give the 5-15 minute explanation, people often get a polite but entirely bored look on their face. Most people just don’t care about the inner workings, they just want the 5 word summary. If they get your business in 5 words – especially if they know nothing about the industry – they feel smart. They like you AND they can tell their friends about you.

So, what’s your five word summary?