1 Dec 2022

One in four households would struggle to pay expected big bill - survey

6:55 pm on 1 December 2022
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People are looking for financial advice and guidance from various apps and systems, the survey shows. Photo: 123RF

A quarter of households would not be able to cope financially with an unexpected big bill, and more than a third want to save more but are struggling to do so.

A survey by Payments NZ - the company that looks after the transfers of trillions of dollars a year between consumers, businesses and banks - matches other research, showing a significant number of New Zealand households have a hand-to-mouth financial existence, are under prepared for financial shocks, and struggle to put aside money for the future.

"It's reflective of a lot of our current conditions in our economy and how people feel about their wellbeing," Payments NZ's general manager of strategy Jane-Renee Retimana said.

The survey also showed consumers were looking for financial advice and guidance from various apps and systems, she said.

Retimana said a clear finding of the survey was support for real-time payments to get money into accounts more quickly.

Payments NZ expected all year round same-day financial payments to come into force next May .

The organisation oversees the transfer of transactions, which presently occur only in the normal Monday to Friday business week, meaning payments on a Saturday are not made until the start of the following week.

"People want money into their bank accounts quickly and the quicker they get paid, the quicker they can recycle that money into buying other goods and services," she said.

All the main retail banks will be part of the new "365-day payments" system, which Retimana said would also be a boon to businesses hampered by delays in payments especially on long holiday weekends.

Under insured

Meanwhile, a new report from the Financial Services Council (FSC) showed as many as 40 percent of respondents could not put their hands on $5000 if faced with an unexpected shock.

The report also showed large numbers had little or no insurance cover to call on in case of emergency or hardship.

It said around 70 percent were underinsured, with only 11 percent having income protection insurance, 14 percent with total and permanent disability insurance, and 18 percent with cover for trauma or critical illness.

Basic life and medical insurance cover were more prevalent, with a third or more having cover, but overall the cost of insurance was a major barrier.

FSC chief executive Richard Klipin said households were struggling with inflation and rising interest rates, but many people had not faced a severe financial shock or recession.

"While it's understandable some are, and should be, prioritising immediate needs, the latest findings are cause for alarm and reflect the importance of long-term thinking when it comes to our finances."

Considering the impact shocks could have on families, insurance was something families could not afford to be without, he said.

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