MasterCard Survey: Kiwis Say Saving is Important

MasterCard Survey: Kiwis Say Saving is Important but 22% Don’t Bank on Saving a Dollar in 2009

Auckland, 23 February 2009 – According to the MasterCard Worldwide Index of Consumer Purchasing Priorities nine out of 10 New Zealand consumers (88%) say saving is important, however almost a quarter (22%) say they don’t expect to save a dollar in 2009.

The annual MasterCard Worldwide Index of Consumer Purchasing Priorities provides valuable insights into consumers’ savings and expenditure behaviour and their discretionary spending priorities for the 12 months ahead. This year’s Index is based on a survey of 6,019 consumers in 14 markets[1], conducted between 1 and 29 September 2008[2].

At 22% New Zealand tops the list of consumers in the region saying they expect to save nothing in the next 12 months, closely followed by Australia at 21%. These figures are significantly higher than the Asia/Pacific regional average of 8%.

“It’s interesting that in general New Zealanders are more focused on the ‘now’ rather than being worried about the future when compared to other markets. This is good news for policymakers working to stimulate the economy through continued consumer spend,” said Stuart McKinlay, MasterCard New Zealand Country Manager.

When asked whether they considered saving to be important, 12% of Kiwis said no. The three top reasons cited were ‘enjoying life now’(60%), ‘feeling sufficiently well provided for’ (29%) and ‘not earning enough to save or spend’ (27%).

“It’s also intriguing to note that life-stage has a significant influence on people’s motivation to save, with under-30s in the Asia/Pacific region consider investment and property as an incentive to cut back on discretionary spending,” said McKinlay.

On the flip side, the top three reasons motivating Kiwis to save are ‘retirement’ (72%), for ‘emergencies’ (54%) and ‘personal travel’ (37%).

Twenty-one per cent say they expect to save between 1%-10% of their annual income and 21% say they plan to save between 11%-20%.

Of the 14 markets surveyed, New Zealand tops the list as the market that cites retirement as the most important reason for saving (72%), followed by Taiwan (65%) and then Australia (60%).

In contrast saving for emergencies is the top savings motive for consumers across the Asia/Pacific region (66%) - Thai consumers are most concerned with saving for this reason (81%), compared with consumers in Vietnam who are least concerned (48%).

"The strong precautionary motive of holding cash observed in Asia/Pacific is a direct reflection of consumers' perception of economic uncertainty and their experiences of recent market volatility. Everything else being equal, this is the single most important factor that determines whether consumer spending will go up or down in the next 12 months," according to Dr. Yuwa Hedrick-Wong, economic advisor at MasterCard Worldwide in Asia/Pacific.

"Consumers’ purchasing priorities are also being affected by strong precautionary saving. While dining and entertaining as well as personal travel remain the top spending priorities in virtually all key markets in the region, spending on auto and big ticket item consumer electronics are conspicuously absent among the top three spending priorities in all the markets surveyed,” Dr. Hedrick-Wong added.

Apart from having an emergency stash, other main reasons for saving are - retirement (45%), investment (36%), and buying property (31%).

Not surprisingly, consumers who are over 30 year of age are more keen to save for retirement than consumers under 30 (53% versus 28%). Consumers earning more than US$30,000 a year are also more concerned with saving for retirement than those earning less than US$10,000 per year (59% versus 31%). The under-30 consumers, single, and divorced/widowed are among the most enthusiastic in saving for investment (40%, 41%, and 49% respectively). The under-30 consumers are also the keenest in saving to buy property (41%).

Additional Highlights (please refer to Appendix 1 for detailed table)
Consumer Savings Expectations
• On average, consumers in Asia/Pacific expect to save between 11%-20% of their income over the next 12 months. Less than a fifth (16%) of consumers expect to save more than 30% of their income over the next year. Close to a tenth (8%) of consumers say they expect to save more than 40% of their income.
• Consumers in Vietnam (34%), Korea (33%), Taiwan (25%), Singapore (21%), Hong Kong (20%) and China (19%) expect to save more than 30% of their own income in the next 12 months.
• Regionally, only 8% of consumers admit they expect zero savings in the next 12 months. Consumers in New Zealand, Australia, Korea, and the Philippines are the least savings oriented in the region with a little less than a quarter of respondents (22%, 21%, 19% and 16%) respectively saying that they do not expect to save anything at all over the next year.
• Of the 13% of respondents across the region who did not consider savings to be important, the top reasons for this are that they do not earn enough to save, they believe in enjoying life now as much as they can, and they have no problems earning money.

More information on the Index can be found at www.masterintelligence.com

MasterCard and its Suite of Research Properties

The MasterCard Worldwide Index of Consumer Confidence and MasterCard Worldwide Index of Consumer Purchasing Priorities comprise part of the MasterCard Worldwide Index suite of research products in Asia/Pacific. The other key MasterCard Worldwide Index research products include the MasterCard Worldwide Index of Women’s Advancement, the MasterCard Worldwide Centers of Commerce and the MasterCard Worldwide Emerging Markets Index.

Besides the suite of Indexes put forth by MasterCard, MasterCard also develops Insights reports as part of its series of ongoing research and analysis of business dynamics, financial policies and regulatory activities in the Asia/Pacific region. Sixty-three reports have been produced since 2004.

The suite of Indexes and reports do not represent MasterCard financial performance.

About MasterCard Worldwide
MasterCard Worldwide advances global commerce by providing a critical economic link among financial institutions, businesses, cardholders and merchants worldwide. As a franchisor, processor and advisor, MasterCard develops and markets payment solutions, processes approximately 21 billion transactions each year, and provides industry-leading analysis and consulting services to financial institution customers and merchants. Through its family of brands, including MasterCard®, Maestro® and Cirrus®, MasterCard serves consumers and businesses in more than 210 countries and territories. For more information go to www.mastercard.com.

[1] Markets surveyed include Australia, China, Hong Kong, India, Indonesia, Japan, South Korea, Malaysia, New Zealand, Philippines, Singapore, Taiwan, Thailand and Vietnam.

[2] The Index and its accompanying reports do not represent MasterCard financial performance.

ENDS

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