Financial strain grips Kiwi households

Households face financial stress

Financial strain grips Kiwi households

A recent Kiwibank report revealed significant challenges for New Zealand households in saving and managing unexpected expenses, highlighting the impact of the high cost of living.

Kiwibank survey findings on savings and budgeting

The State of Savings index, Kiwibank’s first such report, indicated that while 59% of respondents maintain a budget, only 41% have regular savings.

Alarmingly, 30% of those surveyed would struggle to cover an unexpected $500 expense without resorting to borrowing, selling assets, or using a credit card, RNZ reported.

“While it’s encouraging to see that some New Zealanders are managing to save and set financial goals, the research shows that a large portion are vulnerable to financial shocks,” said Steve Jurkovich (pictured above). chief executive of Kiwibank. “Households understood the need for budgeting and saving, although the amount being saved monthly, outside of Kiwisaver, was generally less than $100 for four out of 10 respondents.”

Financial vulnerabilities exposed

The survey’s results are particularly stark regarding the day-to-day financial struggles of Kiwibank customers.

“People are now six times more likely to tell you the big financial issues they are facing are the cost of living versus divorce, illness or losing a job, and we have certainly noticed that over the last 18 months,” Jurkovich said.

He also observed significant reductions in discretionary spending, including entertainment, hospitality, and retail.

The survey revealed that two-thirds of mortgage holders are likely to follow a budget, particularly those aged between 30 and 44.

Women and younger respondents under 30 were found to be more likely to struggle with saving. The priorities for regular savers included emergencies, holidays, and retirement, with noticeable differences in saving goals between genders and age groups, RNZ reported.

Addressing the challenges faced by women, Jurkovich described the data as “confronting,” pointing out the need for supportive measures, especially during periods of parenting or caring for the elderly.

“The data regarding women was confronting and pointed to the need for measures giving them support at times when they were taking time out for parenting or caring for elderly,” he said.

Economic outlook

Jurkovich also touched on the broader economic conditions, suggesting that tough financial times are expected to continue throughout the year. The Kiwibank boss expressed hope that anticipated interest rate cuts by the Reserve Bank might boost confidence, though they are unlikely to offer immediate relief to households, RNZ reported.

Read the RNZ report here.

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