PATRON: Liz Brown ONZM

20 September 2013

Budgeting not slowing down

The Federation of Family Budgeting Services says the number of New Zealanders needing help with their household budgeting continues to place pressure on community organisations.

The Federation is the professional body for budgeting services, with 166 member organisations across New Zealand. CEO Raewyn Fox says they have just completed a statistical gathering round and the results make for interesting reading. “Up until 2009 our budgeting services saw about 30,000 client families a year, in total, and this was pretty steady. Since then our numbers have skyrocketed and we’re now handling over 50,000 client cases a year. This places significant pressure on our services and we’ve had to adjust the way we work to manage the influx,” Fox said.

The Federation also runs a freephone number, 0508 BUDGETLINE which has been handling more callers. “The past two weeks have been the busiest in history on the phone line, with 300 callers managed by a single budget adviser. In 2009 it took two months to get that many callers,” Fox said.

The rapid increase in client figures can partly be explained by the global economic recession, but are also the result of the Future Focus legislation from Work and Income requiring some beneficiaries to complete a budgeting activity. “We have been trying to work with Work and Income to manage this, but we’re pleased Minister Bennett announced a review of the way budgeting services are funded. We expect the Ministry of Social Development (who part-funds budgeting services) will consider the massive influx of Work and Income clients as part of their review.”

The statistics show that budget advisers offer almost 500,000 hours of budgeting advice in a year, about 580 hours per adviser, or 11 hours a week. “Most of our budget advisers are volunteers,” Fox explained, “and altogether they donate 3,200 hours each week. It’s an amazing effort from very dedicated people.”

There is grim reading in the debt statistics. When a budgeting client walks into a budgeting service, they usually have around $20,500 in debt, of which $3,700 is overdue. “It’s the overdue debt that is usually the impetus for them to visit our budgeting service; a nasty letter from a creditor, the power has been cut off, or the repo man is knocking on the door,” Fox explains. “We can usually address the crisis debt first, before helping the client make a plan to avoid getting back into the same situation again. While working with budgeting services, an average client pays back $3,500 of their debt, including $850 of the arrears. This represents $49.5 million returned to the community and is a massive return on investment,” Fox said.

The Federation allocates client debt in to any of 11 categories. Clients owed the most to mortgages ($150 million), government departments ($64 million), finance company loans ($61 million) and bank loans ($48 million).

Fox says there are positives to be found in the report. “Our typical client three years ago came to us with $32,000 in debt, with nearly $5,000 in arrears. This year our typical client presents with only $20,500 in debt, with $3,700. While this is still a sad and stressful situation, it is a great indication that clients are beginning to seek help earlier. We’re really encouraged by that,” Fox said.

The Federation has been proactive in attempting to reach clients earlier, delivering around 1,600 community education courses each year. “Community education courses are a great way to let people know a little about budgeting, but also shows them what a budgeting service does. This means that if things start to go a bit pear shaped for that person, they know where to turn – early. Problems are always easier to sort out early on.”

The New Zealand Federation of Family Budgeting Service offers free, confidential and non-judgemental advice through its network of 166 member budgeting services. You can find you nearest budgeting service at www.familybudgeting.org.nz or by calling 0508 BUDGETLINE.

ENDS

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