A newly released report by ANZ measuring the financial wellbeing of adults in New Zealand has put forward some interesting insights into Kiwi attitudes to saving that have implications for the residential property market.
The report found that more than one-in-three New Zealanders is either struggling or only just getting by.
Tamsyn Parker, Money Editor at NZ Herald, has summarised and analysed the findings of the ANZ Financial Wellbeing study:
"The ANZ Financial Wellbeing study is the first time the bank has extended its research beyond testing financial literacy and behaviour to study how people's socio economic background and psychological factors influence people's financial wellbeing.
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"The research is designed to test how well someone is able to meet their current financial commitments and needs comfortably and whether they have the resilience to continue doing so in the future, and was set up by UK financial capability expert Elaine Kempson.
"It found that while the majority of people were either doing okay (40 per cent) or had no worries (23 per cent), 24 per cent were only getting by and 13 per cent were struggling.
"Those with no worries were more likely to be older, male, have a university qualification, earn more and be in a partnership. Both partners were likely to be savers and the individuals had high levels of savings and low debt.
"Those who were doing okay were likely to have secure employment and a steady household income. They had lower levels of consumer debt than those just getting by, although mortgage debt levels were similar.
"For those just getting by it was tough to make ends meet. Most could meet the every day costs of paying for food or bills, but 37 per cent said they did not have any savings and 38 per cent described their current financial situation as bad.
"Household incomes were more likely to be below average and most said a government payment or allowance was their main income. Of those who worked many had variable incomes. Those just getting by had an average of $2600 outstanding on consumer debt and were more likely to borrow from friends and family and financial institutions like payday lenders. They also had lower savings.
"Of those who were struggling 92 per cent said they sometimes, often or always ran short of money to pay for food and other regular expenses. A further 79 per cent did not have any savings and 84 per cent could survive for less than a month without having to borrow if their income dropped by a third.
"The research found that overall financial behaviours were a major factor affecting wellbeing at 43 per cent, with active saving and the ability to pay day-to-day bills by borrowing being key drivers in people's well being."
ANZ's report touched upon property:
"People who owned their own homes (mortgage-free) had greater financial wellbeing. There was no clear relationship between the size of mortgage debt and financial wellbeing; even mortgage debt of over $250,000 did not result in lower financial wellbeing. Those who were mortgage-free had an average financial wellbeing score of 77 out of 100.
"Those with a mortgage on their home had an average financial wellbeing score of 59, while those who rented had a score of 49."
Antonia Watson, ANZ managing director of retail and business banking, said she had been surprised to find out how much behaviour drove financial wellbeing, rather than how much a person earned.
Those on a low income could have a high wellbeing score, while likewise high earners could also have a low score. But people who were actively saving, and were able to avoid going into debt to pay day-to-day bills had higher wellbeing scores.
"The ability to start saving, even a small amount, is one of the biggest factors in people feeling higher financial wellbeing," Watson said.
Watson highlighted the strong divide between renters and home-owners. "Renters are the most likely to rarely or never save and those who own their homes are the most confident in all aspects of their finances."
