Ask nearly any New Zealander if they’ve been feeling the pinch in their wallet over the last year and we can guarantee you’ll hear a resounding “yes!”. Everybody seems to be struggling at the moment, with the sound of belts being tightened and budgets locking down echoing throughout the country.
Where is the trouble coming from?
According to the latest Centrix credit report (March 2023 as of the time of writing), there are four big reasons why people are finding it hard right now.
- Rising interest rates. Inflation has been running rampant lately, hitting over 7% last year, meaning that the Reserve Bank has chosen to raise the Official Cash Rate and, as a result, big banks have had to raise their rates to compensate. Many Kiwi homeowners now have higher repayments to make every month, leaving less wiggle room for everything else.
- Cost-of-living squeeze. Inflation has also meant that the cost of living has gone up, making everyday costs like groceries, power, petrol and household maintenance more dear. This is affecting people all over the country - everybody has to eat, after all.
- Mortgage arrears. These financial pressures may be contributing to the increased number of missed mortgage repayments too. People are finding it hard to pay their home loans off on time, and the number of arrears has climbed for the seventh consecutive month. Missed payments come with extra fees and interest, turning it into a vicious cycle.
- Unsecured personal loan debt. Many New Zealanders are turning to unsecured personal loans to manage their financial needs - possibly because of the increased costs mentioned before. There are now 330,000 Kiwis with unsecured personal loan debt, with 60,000 borrowers holding more than just one personal loan. That’s a lot of people with repayments to make every month.
Getting above water with money mahi
All this adds up to a tough time for Kiwis, with interest rates and inflation taking extra bites out of the budget from both sides of the sandwich. However, it’s not all doom and gloom. Times are tough, but Kiwis are tougher. With some hard work, smart thinking and community support, it’s possible to ride these waves until there’s smooth sailing again.
- Talk to your lenders. If someone is coming up against debt repayment problems, it’s crucial to talk to the lender involved. There are options to reduce, delay or extend payments to take the pressure off - though remember that this can end up costing more in the long run.
- Go hard on cost-cutting. Trying different budgeting methods and a hard look at must-haves and need-to-haves can be the difference between falling into an arrears cycle and fighting through.
- Make or update your plans. Flexibility is one of the key signs of financial literacy. Tough times mean adjusting short- and long-term financial plans to adapt. Now is the time to review where you’re heading and if it’s still the best course for your whanau.
- Get and stay educated. You’re reading this right now because you’re savvy (or want to get savvy) with your money. Knowledge is the first step towards financial success, so stay up to date and keep learning more about how to make your money mahi for you, not the other way around.
The biggest tip? Remember that you’re not alone. Everybody across the country is finding times tough right now. The whole NZ community is working towards better living with lower spending, so there are heaps of resources (official and otherwise) to help you make it out on the other side.
Resources for financial assistance and support
If someone is struggling, there are many community initiatives designed to help out. This includes:
- Government initiatives and financial relief programs. The government offers various financial relief programs to help those in need. Visit the Work and Income website to explore available assistance options.
- Non-profit organisations offering financial counselling and assistance. Several non-profit organisations, such as Good Shepherd, provide free financial counselling and assistance. Reach out to them for guidance and support.
- Community-based support groups and networks. Local community centres and online forums can connect you with others facing similar challenges. Join these support groups to share experiences, advice, and encouragement.
- Online tools and resources for budgeting and financial planning. Explore online tools like budgeting apps and financial planning websites to help you manage your finances more effectively. Sorted.org.nz is a great place to start.
Our goal at Money Sweetspot is to help you get out of debt and on with life. We count every customer who closes their account with us as a win - so do us a favour and reach out if you’re worried about making an upcoming payment.
This was originally posted as an education article on the Money Sweetspot customer portal. If you read this as one of our customers, you would've earned some money off your loan! Do the mahi, get the treats. Find out more.
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