An inability to save could place some households into "crippling debt spirals" when disasters - such as the coronavirus pandemic - hit, a financial expert warns.
Commission for Financial Capability personal finance lead Tom Hartmann said that according to the OCED data New Zealand was at the bottom of the savings table and ''on average spend more than they earn, which means they are borrowing money''.
In contrast, in countries such as Switzerland or Sweden households save more than 15 per cent of their income.
A Financial Capability Barometer survey shows only 29 per cent of Kiwis have savings equal to three months or more of their income. Meanwhile, 35 per cent have less than one month's worth of income saved.
The fallout of insufficient savings was a lack of resilience when disaster hits.
''People take on even more debt to cope with emergency costs rather than having a savings buffer to fall back on. We tend to manage our spending with debt, borrowing our future money to use today and then paying it back.
''This can lead to crippling debt spirals, but even if it doesn't, the debt is a drag on our finances, since there are added fees and interest that slow down our financial progress.''
Some Kiwis were focused on keeping up with ''the Joneses'' and lack of savings also means an inability to invest.
''This impacts long-term financial wellbeing as investing is the best of way of growing our money over the years.''
However, Rotorua Budget Advisory Service manager Pakanui Tuhura said if you could not make ends meet there was no sense in saving.
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"You've got to take care of those basic needs first – such as housing, having enough food and having enough money to keep warm and pay power."
Tuhura said the biggest hurdle people faced was making the decision to save knowing it meant giving up on some non-essential stuff.
"People decide how they want to spend or save their money, we don't make that decision for them. All we can do is put everything in front of them and help them make an informed decision."
Tuhura said he thought the cost of basic living needs in Rotorua was well within most people's means, but the cost of living with all the other "fancy things" on top, such as phones, computers and toys may be becoming harder to afford.
While he thought the cost of living was increasing, an increase of minimum wage rates and adoption of a living wage by employers may be offsetting some of this.
He said the Rotorua Budget Advisory Service had always felt that how to manage your own money should be in the curriculum for high school at least, even though the curriculum is already packed.
"This is because when those young people come out of school they need to know how to look after themselves financially. We've always believed that the management of your own money needs to be a subject available in high schools."
He said for primary and preschools, they also believed there should be courses available for the parents.
"When you've got a young family, the cost of family living is quite substantial, compared to when the children are older and have left home."
Rapson Loans and Finance owner Chris Rapson said that, generally speaking, for those who earned less than $70,000, depending on their family situation, ''life is a matter of survival''.
''We don't have a great savings record but KiwiSaver has been good to us and is growing in popularity. I think in the greater scheme of things that is the best we can hope for while incomes are where they are," he said.
''You know if you earn $20 an hour for 2000 hours a year that is $40,000 and you are going to pay a fair amount of that away in tax and you have your living costs and accommodation so there is not a lot left.''
But Rapson said a lot of it also came down to discipline and ''if you want it bad enough you will get it''.
''Find someone who can provide good budget advice and stick to it. You know, don't spend money on the way to work on cans of V and pies and filled rolls and coffee.''
Data from the New Zealand Bankers' Association shows that from March 26 to June 30 104,223 customers borrowed $13.8 billion.
ANZ corporate affairs external communications senior manager Stefan Herrick said the low interest-rate environment is challenging for savers while being good for borrowers.
''When setting interest rates we do what we can to balance the needs of both.''
Despite that, ANZ had seen increase of about 4 per cent from February to June in "active savers".
These were customers who made at least one deposit in four out of the past six months and their balance increased by $50 in at least four out of the six months.
Meanwhile, a BNZ spokesman said it was their mission is ''to help customers be good with money so they can do great things with it''.
"Doing what we can to help our customers save money so they can achieve their goals is a key part of that."
Reflecting the economic trends during lockdown, it saw savings rates move slightly, he said.
Budget concerns appear to be on the rise with the website sorted.org.nz, which provides budget advice to Kiwis, attracting more than 150,000 new users during the Covid-19 lockdown in April.
Meanwhile, a Reserve Bank spokesman said household debt was high by international standards, and has risen over the past decade.
Household debt (including rental property) had increased from 156 per cent of disposable income in March 2015 to 163 per cent of disposable income in March 2020.
''Concerns about high household debt level were a driver for us implementing LVR limits in 2013. The trading banks themselves have tightened their lending criteria in recent years, too.''
How much savings should I have?
* Enough to cover all expenses for three months if your income stops.
* This is a rule of thumb only. Your buffer amount will depend on your individual situation.
* Self-employed people whose income fluctuates may need to have more in a rainy day fund than people who have stable employment or more than one earner in the household. - Source Commission for Financial Capability
Sorted School programmes
* It is a free financial education programme to secondary schools called Sorted in Schools.
* Since it was launched in early 2019, 73% of schools have registered their interest and 62% are now using it.
* Provides online resources aligned with the curriculum, designed by teachers for teachers.
* Now resources aligned to unit standards so that students can also gain credits toward NCEA. - Source Commission for Financial Capability
Tips to Saving
Look at your spending
Before you can start saving, take stock of what money's coming in and what's going out. Once you've done this, you can create a budget and work out how much spare cash you could be saving. Make sure you're realistic and allow some spending money for fun things, otherwise you might not stick to it.
Set a deadline
Rather than just aimlessly popping money aside, set yourself a goal and a deadline to reach it. Get an idea of what your goal will cost and work backwards from there, working out how much you can afford to save each pay and how long it'll take to reach your target.
Make a plan
As the saying goes, it won't happen overnight, but it will happen. Write down your plan and spell out the steps you'll need to take. For example, if you want to go on holiday, it might be: Clear your debt, build up an emergency fund, set a savings goal, go on holiday.
Pay yourself first
Rather than save what's left at the end of the month, set your savings aside as soon as you're paid. Treat your savings as a bill that has to be paid, so you're not tempted to skip it. Set up a direct debit or automatic payment to divert money to a savings account straight after pay day.
Every little bit counts
Don't be put off if you can only afford to save a few dollars a month – small changes to your spending habits could save you a decent amount of money. Consider an account that doesn't allow instant access to your money or that earns bonus interest if you don't make any withdrawals in a month.
Stay on track
It's worth reviewing how you're going every few months. If you're slipping off the wagon, take a look at why, you might need to take a fresh look at your budget and adjust how much you're spending or saving. It's better to tweak things than give up. - Source Kiwibank