The devastating impact of Covid-19 on New Zealand's finances is already starting to show with 10 per cent of New Zealand households already missing a rent or mortgage repayment and 34 per cent facing financial difficulties.
Just under half of households surveyed by The Commission for Financial Capability (CFFC) are anxious about their current financial situation and experts are warning the situation may get worse within the next few months as employers ask staff to take pay cuts or make redundancies.
Head of the CFFC, Retirement Commissioner Jane Wrightson, said the survey of 3085 New Zealanders contacted in the last two weeks of lockdown showed it had been a "dark time for many financially".
"However, it is generally accepted that income loss will get worse before it gets better."
Wrightson said the fact that 40 per cent of households believed they were at risk of tipping into hardship if their income reduced in the next three months was concerning.
"They are the group that should be instrumental in helping to rebuild our economy – young couples with children and mortgages, most of them employed, self-employed or business owners. We need to help them bounce back so they can play a defining role in post-Covid New Zealand."
Wrightson hoped the government's temporary income support payments announced on Monday would help them manage their costs while they looked for new jobs or re-trained.
Of the 40 per cent of households surveyed at least one member was receiving the wage subsidy, while the worst impacted Kiwis were Māori, Pacific Islanders and young people.
New Zealand's low financial resilience compared to other countries such as the UK and Norway was blamed on having low levels of household savings before the crisis, low social welfare benefits, a large number of people with jobs in tourism and international education and a high number of people in insecure employment.
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Mangere Budgeting Advisory Services chief executive Darryl Evans said he was getting ready for a rush of people needing budgeting advice and food in the next few months.
"Every person I speak to is telling me the tsunami is going to be back within a couple of months."
Evans was already aware of families moving in together to save costs and making cuts to their budget such as getting rid of Sky or making they had the best insurance and power deals.
"The number one issue that everyone had raised - working, non-working, tertiary students and pensioners - they are all worried about being able to put good food on the table."
He was aware of homeowners contacting their banks and taking mortgage holidays and a high number of renters coming through their doors who had missed payments.
"As we get to level 1 and beyond people know they have to pay their arrears back and that's frightening and alarming for them."
The majority of people they helped only had enough savings to last two weeks.
Bagrie Economics chief economist Cameron Bagrie said the situation was worse now compared to April and unemployment was still climbing.
"While there is a focus on the current situation I think there is a deeper secular issue with poor financial knowledge a major problem."
Bagrie said New Zealand needed strategies and suggestions to improve the financial resilience and awareness of New Zealanders and encourage them to save. He said financial literacy needed to be treated as a life skill and managing money (or a course equivalent) should be compulsory in schools.
However, New Zealand Bankers' Association chief executive Roger Beaumont believed people were more confident now than when the survey was carried out and some were repaying their mortgages again.
"Banks are working hard to help customers in need. That's reflected in the fact over 115,000 customers have reduced or deferred all home loan repayments since we went into level 4 lockdown, for loans totalling nearly $40 billion. Now that we're at level 2 some of these customers are starting to see a way through and are beginning to restart their mortgage repayments."
Commerce and Consumer Affairs minister Kris Faafoi said the government has taken strong action on the economy to protect New Zealanders from the economic shock of covid-19 by offering the the wage subsidy scheme and working with banks to put in place a mortgage deferral scheme.
"Like the rest of the world, we are taking a hit from covid, but our wage subsidy, mortgage holiday and job creation policies are designed to cushion the blow on kiwi households to help them get through this tough time."