Editorial: Mixed picture on how Kiwis are getting by

The Reserve Bank pushed the Official Cash Rate to 5.25 per cent this month. Photo / Getty Images

Editorial

The news that a sizeable number of Kiwis lack a rainy day fund in case of emergencies, is a reminder of how precarious things are for many households.

People are in a catch-22 situation where high inflation, interest rates and costs make it harder to save a cash buffer against unexpected bills. It’s also hard to resist dipping into reserves, for those who have them, when the financial strain goes on for months on end.

In an annual survey 2030 people were asked about their financial resilience.

The Financial Services Council found that 39 per cent of those surveyed - at least more than 1.5 million Kiwis - could not access $5000 within a week to cover an emergency within a week without going into debt. It was an increase of 5 per cent over the previous year.

This isn’t a unique problem for New Zealanders. A CNBC survey reported last week that 53 per cent of Americans do not currently have an emergency fund and 70 per cent are feeling financially stressed.

Even just a few hundred dollars sitting in a separate account, apart from one for regular outgoings, relieves some mental worry. Making automatic payments, cutting back on some expenses, and delaying plans, are common ways to try to nudge savings along.

The CNBC survey says the higher the income the easier it is to put some away and that people should aim to save three to six months worth of living expenses.

Stats NZ reported this month that household saving was $2.1 billion in the December 2022 quarter, the same level as in the September quarter. Research in March found that paying for food was currently a bigger worry than housing for people.

However, there’s a mixed picture on Kiwis’ behaviour with spending on hospitality so far this year being up $933 million (32.3 per cent) compared with the same quarter a year ago. Non-retail spending was up 11.4 per cent in March compared to February.

People with transportable skills, perhaps reassessing or making up for lost time after the worst of the pandemic, may be tempted by Australia. It’s close to home but with more opportunities. For many, though, holding to existing jobs here in this economically difficult period will be the priority.

Earlier this month it was reported that nearly 5000 New Zealand nurses had registered to work in Australia since last August, where there were lucrative short-term contracts of up to NZ$8500 a week.

The Telegraph reports that Britain is also a key target market for an Australian health system battling staff shortages. Junior doctors in the UK national health service went on strike last week to demand a 35 per cent pay rise. Nurses are set to strike at the end of the month. New Zealand, like Australia, benefits from medical professionals there seeking to work abroad.

Overall there was a provisional net migration gain of 52,000 to New Zealand in the year ended February - made up of a net loss of 17,300 Kiwis and a net gain of 69,300 non-New Zealand citizens. Since last October migration has been ticking into positive territory.

With the election now just six months away and the Reserve Bank still chasing down inflation by hiking the Official Cash Rate to 5.25 per cent, how voters fell about their job and life situations in the next few months will be central.