Keeping a close eye: Kiwis feeling the pressure

More New Zealanders are keeping a close eye on their finances, as the pressure grows from the high cost of living.

The numbers are revealed in the latest financial wellbeing survey by ANZ New Zealand.

Among those surveyed, 62.8 per cent said they were keeping track of their money. That’s the highest score ANZ’s researchers have seen in the eight years they have been monitoring New Zealanders’ financial wellbeing.

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The increase in lending rates and the broader cost of living is clearly putting a strain on many people’s finances.

The rise in people’s checking their finances came as the survey showed people’s overall optimism about their finances had softened.

ANZ’s Financial Wellbeing Indicator score fell to 57.7 in the three months to June 30th, from 58.9 in the previous quarter.

This is the second lowest score reported by the survey five years. 

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A Financial ‘Pulse Check’

The ANZ Financial Wellbeing Index provides an overview of the personal financial wellbeing of New Zealanders and is intended to act as a ‘pulse check’ on how Kiwis are feeling about their financial wellbeing.

The Indicator Score is made up of three components.

The first of these is Meeting Commitments. How well you can pay your bills, your rent or your mortgage for example.

This metric has also fallen to the second lowest point we have seen, reflecting the cost-of-living crisis.

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The second component of the score is Feeling Comfortable. This metric reflects how people feel about their situation both now and in the future.

So things such house prices (for home owners), and KiwiSaver fund balances have an impact, among other factors.

And slowly falling house prices appear to have had an impact as many people see the value of their biggest asset flat or even declining. 

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The third element is Resilience. This is essentially how well people are able to cope with the changing environment.

Key factors here are employment levels and household savings. And this metric has been remarkably stable over the course of the past 5 years. 

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While the unemployment numbers have risen recently to 4.6 per cent as at June 2024, we are still below the levels seen from 2009 to 2015 where it sat above 5 per cent.

And these levels of employment will be helping to keep the resilience metric up. 

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And data from the Roy Morgan survey also shows median household savings have increased a little over the past 6 months, as many people have reduced spending, again helping to keep the resilience metric up there.

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If we look at how the various segments have fared over the past two years, we can see the pain is unevenly felt. Those sitting in the bottom ‘struggling’ segment have increased by over 50% from 10.1% to 15.9% of the population.

At the other end of the spectrum those in the ‘no worries’ group have also increased a little. As have those in the ‘getting by’ segment. As a result, the size of the ‘doing ok’ segment is dramatically down. A great illustration of the squeezed middle.

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Improving financial wellbeing

A person’s financial wellbeing is influenced by a complex range of factors including their socio-economic circumstances, behaviour traits, attitudes towards money and their stage of life.

Some of these factors are beyond a person’s control. But there are two behaviours that can have a particularly strong influence on improving a person’s sense of financial wellbeing – active saving and not borrowing to pay for everyday expenses.

Developing a regular savings habit and having at least $1000 put aside can materially improve a person’s feeling of financial wellbeing.

Having a savings buffer can help give you a sense of control, especially when something unexpected – and potentially expensive - happens, like a car breaks down or an appliance needs replacing.

Almost 55 per cent of ANZ customers have a savings buffer in place, meaning they have at least $1000 in their bank account.

Approximately 20.6 per cent of ANZ customers are active savers, meaning they are regularly contributing into a savings account.

Saving can be hard to do when we have high inflation and rising interest rates.

Anyone who has concerns, or who wants to talk about their finances, should contact ANZ.

ANZ has a range of information to help people manage their finances on our financial wellbeing hub.