Consumer New Zealand says its latest quarterly Sentiment Tracker survey suggests 65% of New Zealanders save less than 5% of their income or nothing at all.
Gemma Rasmussen, Consumer NZ's head of research and advocacy, says this suggests half the population is either anxious about their level of savings, or have none to speak of, which is the highest level of concern Consumer NZ has seen in two years. Furthermore, about a third of survey respondents say their standard of living deteriorated year-on-year.
Rasmussen says being unable to save is now the reality for many New Zealanders, which has coincided with an increase in the use of buy now, pay later services.
"Buy Now Pay Later (BNPL) is surging in popularity, with users of the service jumping from 23% to 29% of the population in a year. Our latest banking survey found more than 40% of BNPL users were using the service to pay for essentials, like groceries," says Rasmussen.
"Households with incomes less than $50,000 are more likely to use BNPL to cover the cost of essentials. Spending on essential items like bills, groceries and fuel is now taking a broader chunk of paychecks with many New Zealanders racking up debt just to get by."
The consumer lobby group says its Sentiment Tracker is nationally representative research surveying 1,000 new respondents every quarter.
Below is Consumer NZ's full press release.
Half of New Zealanders are deeply anxious about savings, or have nothing tucked away
Consumer NZ's latest Sentiment Tracker has found 65% of New Zealanders save less than 5% of their income or nothing at all, raising concerns about saving levels.
“Half the population is either anxious about their level of savings, or have none to speak of, which is the highest level of concern that we've seen in two years,” said Gemma Rasmussen, Consumer NZ head of research and advocacy.
“It's expected this situation will worsen with more than four in 10 New Zealanders anticipating their savings will decline in the coming year.”
People’s standard of living is also impacted.
“About a third of New Zealanders said their standard of living had declined compared with a year ago,” said Rasmussen. Ashley*, the mother of a 3-year-old boy, is struggling with the ongoing high cost of living. Although she earns over $120k, after leaving an unhealthy relationship, she is feeling financial strain.
“I earn good money but with mortgage, daycare, insurances, living expenses and so on, I’m struggling to save - let alone replace insulation and a dodgy shower. I don’t meet eligibility for any support - and I’m worried about having a slush fund for emergencies.
“Twelve months ago, I was financially privileged. I had thousands in savings. Now I can only dream of saving $200 a fortnight,” said Ashley.
Being unable to save is now the reality for many New Zealanders. This has coincided with an increase in the number of people using Buy Now Pay Later services.
“Buy Now Pay Later (BNPL) is surging in popularity, with users of the service jumping from 23% to 29% of the population in a year. “Our latest banking survey found more than 40% of BNPL users were using the service to pay for essentials, like groceries.
“Households with incomes less than $50k are more likely to use BNPL to cover the cost of essentials.
"Spending on essential items like bills, groceries and fuel is now taking a broader chunk of paychecks with many New Zealanders racking up debt just to get by,” said Rasmussen.
Consumer's Sentiment Tracker findings illustrate how this cost-of-living crisis is hitting people right now.
*Ashley's name has been changed for privacy reasons.
10 Comments
They were only possible due to low-interest rates. Interest rates are not low anymore, and retailers and importers are having to absorb higher freight and wage costs. Effectively the margin is not there to allow the zero interest rate incentive to purchase goods.
I have seen a few large car manufacturers offer 1.99% interest but that is about all. The 0% credit card transfers for 6 and 12 months are also gone and will likely never return unless we get back to the low-interest rates we had leading up to and after the Covid debacle.
Perhaps part of this is due to the CCFA (or whatever it's called) rules?
I was discussing this with a client recently, who manufactures a range of products to retail through Big Box outlets e.g. Harvey Norman, Smiths City etc.
This is the aspect of their business that has declined the most over the past year - in other words the retailers just aren't selling as much of this category of product where much of the sales came through buyers walking into a showroom and walking out with $5k or so of product on interest-free finance.
Their feedback has been that CCFA/lending rules has made this tougher.
Certainly here in Chch I see advertising every week from Harvey Norman promoting their latest interest free offer - but whether you qualify or not is another matter.
You are right. I can see the interest-free 36-month deals on their website. Must be I just don't watch free TV anymore and never see the ads. I don't think CCFA would have anything to do with it. Once you have the GEM Visa you can just go and buy stuff and put it on interest-free credit. I guess the hard part for most would be actually getting the GEM Visa in the first place. I'm sure many people still have these cards floating around.
It's the new applications that are the killer.
What this client has described to me (from feedback from the big box retailers, and I've seen the numbers behind it) is that:
- Cash (incl credit card) purchases of cheap products are still going well
- Still plenty of cashed up rich people buying high end items, e.g. buying $20k of product in one go
- The collapse has been in that somewhat impulse purchase where the likes of a mid 30s couple would come in and purchase $5k or so of product in one go and often finance on a GEM Visa or similar
Partly because the "squeezed middle" is feeling the pinch, partly because it's such a hassle to get credit products if you don't already have a card.
We will continue to get poorer as we don't own our businesses or even enough of our homes.
As Marx explained, the benefit always flows to the owner. We are told to work harder and smarter. eg: Faster on the treadmill. But we won't hold the benefit of it without ownership.
“Consumer New Zealand says its latest quarterly Sentiment Tracker survey suggests 65% of New Zealanders save less than 5% of their income or nothing at all.”
What do you expect when most of society (low and middle incomes) face relatively high income taxes while the rich get mainly free capital gains on assets.
The NZ tax system needs serious reform.
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