The council dishes out some tips on how to be recession ready
New Zealanders were alarmingly less prepared for a recession than they were in 2022, the Financial Services Council said.
This showed the precarious position many are in, especially given the latest RBNZ rate hike to 5.25%, which meant many Kiwis would find it extremely tough to manage their household finances.
Being able to access money in an emergency is a key indicator for being financially resilient and prepared. Early data from the Financial Services Council’s (FSC) 2023 Financial Resilience Index, however, showed that 39% of respondents, or more than 1.5 million Kiwis, could not access $5,000 within a week without going into debt if they had to deal with unexpected expenses.
The figure was up from last year’s 34%, indicating that Kiwis now were less prepared for financial shocks than they were a year ago.
“The last year has been incredibly tough for Kiwis with the cost of living going up, the increasing interest rates, and the growing risk of the economy tipping into recession, the focus has clearly gone onto household finances,” FSC CEO Richard Klipin (pictured above) said.
“However, as we continue to experience an uncertain economic period, getting recession ready is important for all New Zealanders. Preparing isn’t just about looking after your money – it’s also about looking after you and those you love.”
Klipin urged Kiwis to take this time to become recession ready, which meant “leaning into that famous Kiwi resilience, looking after our wellbeing, and getting clear on how we can navigate our finances over the coming months.”
“If you are concerned about your finances, the first and most important thing to do is to take stock, and if you have any questions speak with your whānau, friends, bank, insurer, KiwiSaver or investment provider, and if you have one, your financial adviser,” he said.
FSC dished out some tips on how to gear up for recession:
- Stress test your rainy day fund, or start funnelling a bit of each paycheck into a savings account now
- Prepare for mortgage interest rate hikes
- Review your KiwiSaver and talk to your provider about your options
- If you need help with day-to-day money matters such as managing debt or budgeting, talk to an expert, such as MoneyTalks (0800 345 123)
- Remember, things will get better. Markets fluctuate and undergo cycles. Things might be challenging now, but eventually the pendulum will swing the other way.
The Financial Services Council’s 2023 Financial Resilience Index research report will be released on May 3.
Use the comment section below to tell us how you felt about this.
