ASB data shows financial wellbeing improving but many 'just coping'

28 October 2021

  • Customers were better prepared financially for the most recent Level 4 lockdown, with average cash balances now 60% higher than those of the first 2020 Level 4 lockdown.
  • Despite the improved average cash balances, 40% of customers still have less than $1,000 in funds available.
  • Spending was down in September, with outflows from Auckland customers' accounts dropping 22%, compared with 5% for the rest of New Zealand. 
  • 18 -24-year-olds emerged as New Zealand's top savers, boosting their average cash balances by 9% during September 2021 lockdown period compared with an average of 5% across the board.  

Latest insights from a study of more than 500,000 ASB customers reveals ongoing increases in average cash balances held by customers of all ages since pandemic lockdowns began in 2020. This has contributed to a 6% increase in overall financial wellbeing.  

ASB Chief Executive Vittoria Shortt says, "At a national level, we are seeing an improvement in financial wellbeing. However, while some New Zealanders are now more financially resilient, COVID's ongoing economic impact means a significant number continue to do it tough." 

Shortt says the pandemic has resulted in more New Zealanders actively planning for the proverbial financial rainy day, with lockdown restrictions triggering reductions in non-essential spending for many.  

"This is reflected in average customer cash balances being 60% higher in September 2021 than they were in February 2020," says Ms. Shortt.  

However, the baseline for Kiwis' overall financial wellbeing remains low. 38% of ASB's customers were found to be living pay-day to pay-day, and 49% of our customers appear to be 'having trouble' or 'just coping.' 

ASB's Support Finder tool launched on 2 August to help customers find government financial support for themselves and their family. It has been visited by over 125,000 people, resulting in more than 14,000 referrals to Government agencies for additional financial support. 

"Financial wellbeing is multi-faceted and knowing how and when to access appropriate support is vital," says Ms. Shortt. "Support Finder is one way we can help empower our customers to make positive change."

ASB's financial wellbeing research found Aucklanders increased their average cash balances by 5.4% during September, marginally ahead of savers outside the region whose balances grew by 4.8% in the same timeframe.  

But Ms. Shortt says the big surprise was in the 18–24-year-old cohort who emerged as New Zealand's lockdown savings champions. 

"18 - 24-year-olds emerged as New Zealand's strongest savers through lockdown, increasing their average cash balance by $600 (or 9%) during September. This compares with an average of around 5% for all other age groups across the same period," says Ms. Shortt. 

ASB is running co-creation sessions with 18-24 years to understand what matters to them about money.  

"FOMO (fear of missing out) and FOMU (fear of messing up) are very real concerns for Gen Z. They know the choices they make today can, and do, impact later years. But there are some really easy steps they can take now to lock in the financial progress they've made over recent weeks," says Ms Shortt. 

"Given this group has come through the latest lockdown financially ahead, they could take the next step by exploring something like ASB's Save the Change tool, available in our app, to build on that strong start by automatically moving small change across to a savings account." 

However, Ms. Shortt warns that while overall cash balances have increased, many people are still managing on fine margins.  

"When we assessed financial wellbeing last year, it was sobering to find 48% of our customers had less than $1,000 available in savings. That has dropped to around 40% as of September this year as spending has decreased while account inflows remaining steady for most."

Account inflows (a customer's money from all income sources) have been stable for most in part reflecting the ongoing availability of the Government wage subsidy for those impacted by lockdown restrictions. 

"However, the uncertainty and restrictions on people's activities at alert levels 3 and 4 have translated into a significant drop in spending in September, with outflows from Aucklanders' accounts dropping by 22%, compared with a 5% drop across the rest of the country," says Ms. Shortt. 

Nationwide card transactions data across the August - September period showed spending pared back to the essentials, with supermarkets maintaining their position as the top retail spend category. Fuel spending was up just 0.8% month on month, and retail spend on clothing and footwear fell 10.4% in September, after a 40.6% August fall (-26.3% over Q3).

Consumer spending in September was mixed, with retail electronic card spending lifting just 0.9% in seasonally adjusted terms. Stock shortages, international shipping delays and freight costs are also stymieing a strong retail rebound. 

"We are still some way off seeing a return to alert level 1 spending patterns. New Zealand's bumpy journey out of lockdown means we all need to be prepared for challenging times ahead. Having savings put aside can make a big difference when facing into uncertainty," says Ms. Shortt. 

ASB's financial wellbeing research is based on five key measures, including savings, spending and ability to meet regular payments.

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