One in three Kiwi households had yet to recover back to their pre-Covid income as of October and 11 per cent were still being severely impacted with a drop of more than 30 per cent.
New research by the Commission for Financial Capability - the government's money education arm - has revealed who has been hit hardest financially by Covid-19.
A survey of more than 3600 households in October found working families in blue-collar occupations were hit hard and were still likely to have reduced incomes.
Those families were likely to be couples aged 18 to 54 with children who were renting, often with one parent at home and the other working in jobs such as construction, retail and food and accommodation services.
Public sector workers and those in knowledge-based sectors had fared much better, the research found.
The percentage of those still on reduced incomes was highest among households where the main respondent was 55 to 64, indicating challenges in getting another job or extra work compared to younger workers.
Māori and Pacific households were also more likely to still have reduced incomes, with Māori households having the highest proportion of those whose income was down more than 30 per cent.
Pacific households had the highest proportion of those whose income was reduced by up to 30 per cent.
Jane Wrightson, head of the Commission For Financial Capability and the Retirement Commissioner, said it was encouraging that income reduction was slowing improving overall.
But financial resilience was still a concern, with 41 per cent of households still exposed to high debt and low savings.
"Households in the exposed segment have increased their saving levels, which suggests some of them realised the precarity of their financial situation," Wrightson said.
"We need to encourage them to keep going so they are better prepared for the next financial shock."
Wrightson said it was also a relief to see that the high rate of enquiry by people wanting to take money out of KiwiSaver due to financial hardship had not come about.
"Your KiwiSaver is a long-term investment for your future that should only be accessed as a last resort. There is a lot of other help available, listed on the covid19.govt.nz website, that households can turn to first."
She said people who needed help should use the free guides on the Sorted and MoneyTalks websites and free face to face guidance through the FinCap budgeting service.