The Financial Services Council’s latest Financial Resilience Index points to concern about inflation, house prices and interest rates continuing to challenge Kiwi’s financial resilience, with inflation showing the biggest shift in concern about financial issues since last year.
Kiwis are increasingly worrying about money, and more often: Almost 50% are worrying about money daily or weekly, equating to an increase of 300,000 people since last year.
Negative effects of financial issues on our wellbeing have increased: 59% say financial issues have affected their overall wellbeing, up from 53% in 2022.
Younger Kiwis are disproportionately affected: 64% of respondents aged 37 or below worry about money daily, weekly or monthly, more than any other age group.
We’re less prepared for a rainy day: Only 53% of Kiwis could access $5,000 within a week in a time of emergency, down from 59% in 2022.
87% of Kiwis are worried about inflation, up from 80% in 2022.
Richard Klipin, CEO of the Financial Services Council said, “The impact of the current cost-of-living crisis mirrors the increasing wellbeing challenges reported in our latest Financial Resilience Index released today.”
“Despite high financial confidence driven by job security, the reality is that fewer Kiwis have household investments, are unable to find $5,000 in a week for an emergency and are facing increasing debt that they are unsure if they will be able to pay,” continued Klipin.
The research additionally found that 54% of the respondents that had fixed rate mortgages said they would be expiring in 12 months or less, and 30% in 6 months or less.
Klipin said, “Reports in the media indicate the OCR may remain around the current rate for a number of quarters, so those coming off fixed rate mortgages over the next 12 months are a group that are going to feel the squeeze and need to prepare for higher monthly payments to reduce money worry and improve overall wellbeing”.
The research also highlights a real tension between spending today and saving for tomorrow, and for those that can find some money to put away, low financial literacy is hampering their ability to invest and save well for the future.
Klipin continued, “But again, as we have seen in previous years, it’s the younger generation that are disproportionally bearing the burden of this economic cycle. Whilst older generations are also finding it tough, they have been here before and know that it will come good. For our children and grandchildren, it’s new and simply an unknown.”
“What’s key, therefore, is looking out for our whānau, friends and colleagues, checking in to see how they are doing and letting them know that these tough times won’t last forever,” concluded Klipin.
Download the Financial Resilience Index 2023 here.
TOP TIPS TO GET RECESSION READY
Stress test your rainy day fund:
It’s times like these when rainy day funds come into their own. If you haven’t had to dig into it yet, there’s no better time to start funnelling a bit of each paycheck into a savings account.
- Prepare for mortgage interest rate rises:
If you’ve been on a fixed rate mortgage that’s coming up for renewal soon, talk to your mortgage adviser or bank about what you can do to prepare.
- Don’t neglect your KiwiSaver:
Preparing longer term is as important as making sure you are recession ready in the shorter term - review your KiwiSaver settings and if you have any questions, talk to your provider or your financial adviser about your options.
MoneyTalks (0800 345 123) offers a free service for those needing help with day-to-day money matters such as managing debt or budgeting.
Remember that the markets fluctuate and undergo cycles. If you are doing it tough, remember that while things might be challenging right now, eventually the pendulum will swing the other way.