New Zealanders more financially confident, though not always well-off

New Zealanders are feeling more confident financially, even if their bank accounts don't reflect it at the moment.

The Financial Services Council has released its latest Financial Resilience Index, which shows nearly two-thirds of people describe themselves as either very confident in making financial decisions or extremely confident.

But 25 percent said they could only continue their current lifestyle for up to a month if they stopped earning an income, and another 23 percent said they could last one to three months.

Only 15 percent said they would be okay for two years or more.

Twenty-three percent said they were very unconfident about the economy, compared to 21 percent last year and 20 percent in 2024.

Inflation continued to be the biggest financial concern for most people, although the intensity of that concern had eased. Worries about house prices had also softened a bit, but worry about interest rates was unchanged.

Just over 20 percent of households had less than $50,000 in investments. Another 15 percent had between $50,000 and $150,000. But 4 percent had more than $1 million.

This year, 13 percent of households said they felt very prepared for retirement, up from 7 percent last year. Another 39 percent said they felt reasonably prepared.

The FSC said while access to emergency funds remained unchanged, overall household savings declined, particularly among those with lower levels of accumulated savings.

"Looking across the full period since 2020, the index shows a pattern of disruption, recovery and emerging divergence," the report said.

"Many indicators strengthened through the post-Covid-19 recovery period, particularly between 2021 and 2023, reflecting improving economic conditions. However, more recent years show a mixed picture, with gains in confidence and retirement preparedness alongside declines in job security and investment participation.

"This suggests that, while sentiment has proven resilient, underlying financial behaviours and conditions have come under increasing pressure, particularly during the cost-of-living crisis."

Generation gap

Just over 40 percent of people said they could use their remaining retirement savings to keep their lifestyle going for more than 10 years, 22 percent said six to 10 years and 15 percent said three to five years. Only 13 percent would last less than a year.

"What was interesting for us is the improvement in people's confidence around financial decisions," chief executive Kirk Hope said.

"But the interesting thing is it's not really pushing through into resilience, into financial resilience yet… at least half of New Zealanders are feeling worried about money. And that's different for different age groups.

"But the concerning thing is that it's a pretty high percentage - 76 percent of Gen Zers are worried about money monthly, and 65 percent of New Zealanders are worried about money monthly. So the confidence around their understanding of finances is not, at this point, translating into more financial resilience, which is going to be critical for people for the future."

He said New Zealanders were becoming more acutely aware of how international events could affect the local economy.

He said there was reason to be optimistic about the future.

"KiwiSaver is now a very well-regarded product, many New Zealanders are in it… the increasing contribution levels, whilst challenging, are not seeing large numbers of people dropping out of the schemes.

"I also think for younger people, around 50 percent of 18 to 25-year-olds are in KiwiSaver. If they're in, 96 percent of those people are contributing.

"That's one of the reasons I think financial confidence is improving, because they are engaging with their financial situation. They are wanting to save for the future. They perhaps don't see housing as one of the things that may be attainable, as it might have been in the past. So they're really focused on building a financial asset, and they see KiwiSaver as that."

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