Kiwis Struggle with Saving

Kiwis Confident with Everyday Expenses, Struggle with Saving

Auckland, New Zealand –5 March, 2015 – New Zealanders are confident about managing day to day finances, but one third struggle to set aside money for big purchases, according to research from MasterCard.

New Zealanders are positive about managing their everyday bills, with 93% saying they were comfortable with normal budgeting.

However, 33% said they often had problems setting money aside for big purchases, and 21% admitted to having difficulty keeping up with their bills and credit commitments such as hire purchases and loan repayments.

“New Zealanders are generally sensible about money, and as a country we have a good level of basic financial literacy, but more education has the potential to further to empower Kiwis and make more people confident with money management,” says Peter Chisnall, MasterCard New Zealand Country Manager.

“It is great that New Zealanders are aware of how much they are earning and managing that money, but a third of those we surveyed still have problems setting money aside for big purchases or emergencies,” says Chisnall.

The research found the top reasons for saving were for buying or a renovating home (39%), retirement (38%) and international travel (37%) the top reasons for saving.

58% of New Zealanders are not saving for precautionary needs, and on average, New Zealanders say they could survive for four months on savings alone if they lost their source of income.

“Saving in general is great, but it is somewhat concerning that 32% of Kiwis don’t think their emergency savings would last a month if they lost their source of income,” says Chisnall.

New Zealanders are realistic about how much they should be saving, with 80% of Kiwis believing they should have a minimum of 3-6 months of cash savings to meet emergency needs.

In the event of income dropping, dining out and overseas holidays continue to be the top items that would be cut back (66% and 40% respectively). If income suddenly increased, most New Zealanders would put the money towards paying off debts (43% first priority) and putting money into savings (25% first priority).
“Managing money at times can be complex and MasterCard enables people to manage their spending wisely by offering many options including debit cards and prepaid cards,” says Chisnall.
Top Tips for Reducing your Debt from MasterCard

• Actively manage your money:
o Set a monthly budget with incoming and outgoing spend
o Pay back credit cards purchases in a timely fashion to avoid interest charges on the remaining balance
o Always check your credit card statements carefully in order to spot any irregular transactions
o Using your prepaid, debit or credit card to pay for purchases and make payments will help you to keep track of all your spending in one location
o Update your personal details if you move address. This will help to prevent your financial information from falling into the wrong hands

• Choose the right card payment product: There are many different types of payment card products available. Getting your finances in order and debt under control involves evaluating whether you are using the right payment card to suit your personal situation.

If you need to utilise the convenience of a line of credit over the short term, you should look around for a Low Rate credit card instead. Interest rates for Low Rate credit cards typically start at around 13% and could save you unnecessarily paying a higher interest amount.

Websites such as www.sorted.co.nz or www.interest.co.nz, and MasterCard’s website, provide useful tools to help you determine what product may be right for you.

• Curb your spending: Freeze all unnecessary spending while you assess your debt and formulate a plan for getting on top of it. This will no doubt involve forgoing big-ticket items, reducing every day spending, or a combination of both.

• Assess debt levels: Understanding how much debt you’ve accumulated is the first step towards reducing it. Determining your total amount of debt can be difficult, but it’s important to have the complete picture if you are going to overcome it.

• Set a goal: Set a big goal, then break it into a series of smaller goals which are achievable in the immediate term. If you are tackling debt as a family or couple, get everyone involved and look towards reaching the goal together.

• Formulate a plan: Put the plan for reaching your goal down on paper. Set targets for monthly expenses, such as transport, utilities etc. Then try to spend less than your set targets. Make the difficult decisions about how to squeeze more of what you earn to reduce your overall debt, but always remember to leave some budget for unforeseen expenditure (e.g. replacing a car battery, calling in a plumber) so your plan doesn’t fall down on something unexpected.

• Track spending: Keeping a spending diary or online journal will help you identify ways to reduce expenditures and allocate more money to paying off your debt. Checking your card statements can also assist with keeping track of where you can reduce spending.

• Monitor your debit and credit cards: Always check your card statements carefully and on a regular basis in order to spot any irregular transactions as quickly as possible.Using a MasterCard card can protect you from any nasty surprises as liability for an unauthorised charge is limited.

As a customer, you do have the responsibility to inform your financial institution if you become aware of or see an unauthorised transaction on your credit card, or if your card is lost and stolen. Policies do vary depending on the credit card issuer, so make sure you read the small print. However, most providers do offer some extra level of protection on purchases. For example, MasterCard Zero Liability policy protects against unauthorised transactions in store, over the phone and via the Internet[1].

• Pay more than the minimum: Charges on credit cards should be paid back in a timely fashion to avoid interest charges on the remaining balance. Paying more than the minimum repayment amount can be a critical first step in reaching your goal.

Ends

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