Media release

Wednesday 09 December 2009

Hard times swamp budgeting services

The Families Commission is calling for greater investment in budgeting services so they can provide early assistance and financial education.

A Families Commission study Escaping the Debt Trap – Experiences of NZ Families Accessing Budgeting Services released today demonstrates that budgeting services make a real difference, and empower families with the confidence and skills they need to overcome problem debt.

Families Commissioner Gregory Fortuin says services are struggling to cope with the level of demand the recession has generated.

“Budgeting services would be more effective if they were resourced to intervene early, and provide training to prevent problem debt. Even during times of prosperity, it is difficult for them to resource early intervention. Now that they are flooded with need they are stuck fighting fires. Many of the services need more funding and personnel targeted towards helping families before they are in crisis

The role budgeting services play in reducing problem debt has a profound impact on a number of health, social and economic outcomes for families, he said.

“If families manage their finances well, they have more resources, less stress, and are better able to negotiate the trials life throws at us all. Financial literacy can transform a family’s quality of life, which has positive downstream impacts on a number of issues – from nutrition to preventing family separation.”

“This study confirms that budgeting services are doing a fantastic job at helping families get back in the control of their finances. But what it also highlights is that the services would be more effective if they were able to work with families before things get out of control. For example, it would be more effective for a service to have contact with a family soon after a major life-changing event occurs – such as diagnosis with a chronic illness, disability, losing a job, having a baby or separation. Or when families first realise things are getting out of hand.

“Early intervention would require other services such as social and health services to refer families to budgeting services as a matter of course.”

Mr Fortuin said equipping families with financial skills through educational workshops would help to prevent families’ finances from spiralling out of control.

“Budgeting services are well placed to teach families budgeting skills, before any problems occur, because they have the expertise and understand the issues families are facing.”

Even providing budgeting support for one person is worthwhile.

“When one family member becomes more financially knowledgeable, other family members, including children, pick up the skills. Education is a multi-generation intervention worth investing in. Like the old saying goes, give a man a fish and you feed him for a day, teach a man to fish and you feed him for a lifetime.”
ends

© Scoop Media