More people describe their financial position as uncomfortable, and more are worried about their finances from pay to pay. It is increasing for those who have a mortgage, but remains the highest for renters, reports Patrick Nolan

By Patrick Nolan*

While easing interest rates are a welcome relief for many Kiwis, the compounding effects of the last few years have taken a toll on how people are doing financially.

In the consumer insights survey released for by Te Ara Ahunga Ora Retirement Commission as part of this year’s Sorted Money Month, growing numbers of families were barely keeping afloat or are in financial distress.

The percentage of New Zealanders who said they are struggling with their finances increased from 49% in June 2022 to 56% in June 2024.

This survey was in the field over three years and covered a total of 12,087 people. The sample was designed to be nationally representative of all of New Zealanders 18+ based on age, gender, and region.

More widespread financial discomfort was also apparent when the figures were broken down into different population groups.

For groups whose financial discomfort has traditionally been high, like Māori and Pacific Peoples and renters, this continued to be the case, with their discomfort levels remaining reasonably stable at 61%, 64%, and 67%, respectively.

In the case of women and 18–34-year-olds there was a sharp increase. For women this climbed from 51% in 2022 to 60% in 2024 and rose from 46% to 54% for the 18–34-year-olds.

So, why were people feeling less comfortable with their finances?

One reason is debt. More people were reporting they are worried about the level of debt they are in.

Across all New Zealanders this increased from 27% to 30% in the two years to June 2024. For mortgage holders this increased from 32% to 37%.

Reductions in interest rates since June should help with these concerns.

And the survey also showed that over the last two years there has been a slight decline in the number of people using debt products, particularly credit cards and mortgages.

This illustrates how families are already doing a lot to manage their finances.

This is consistent with other data in the survey. The number of people who would rather save for a big purchase than go into debt increased from 70% to 76% between June 2022 and 2024.

And a large majority of people actively practice money management behaviours – with 83% of people carefully considering purchases before making them, 86% paying their bills on time, and 81% keeping a close watch on their financial affairs.

Indeed, about 59% of people set financial goals and work towards them, and the interest in retirement planning is growing. This is particularly strong among the Pasifika population, with 50% now planning for retirement, compared to 34% of the overall population.

While some of these trends are positive, there is still a lot of work to do. Only 49% of people say they could handle an unexpected expense.

And, in relation to retirement planning, only 26% of New Zealanders have a clear idea of the income they will need. Confidence in achieving a financially comfortable retirement stands at 43%.

And even among people worried about debt, fewer than 20% will seek professional advice. People are more likely to turn to friends, family, and social media.

Informal sources of advice can be valuable and provide guidance in relevant and engaging ways – but they aren’t risk free. People need financial expertise, not just opinions.

This guidance can come from sources like banks and financial mentors. They can help families avoid getting into financial trouble or can find a way out when problems have begun.

But for many people what would make the biggest difference is accessible and trusted tools and guidance that they can use to help them make their own decisions.

This is the thinking behind Sorted Money Month and the tools and information on the Sorted website, which are used around 2.1 million times every year.

The economy continues to present challenges for Kiwi families. While inflation is on the way to being “beaten” and interest rates have started to fall, the labour market is becoming weaker with unemployment forecast to rise from 4.6% in June this year to 5.4% next year.

For many Kiwi families financial challenges remain. This makes it important to continue to support them to build their financial capability. This will help them make most of every dollar and keep their heads above water.

Patrick Nolan is director of policy research at the Retirement Commission / Te Ara Ahunga Ora