ASB research finds young Kiwis 19 per cent more likely to live paycheck-to-paycheck

ASB’s latest Financial Wellbeing research has found many young New Zealanders aged 18 -24 are struggling to balance day-to-day living costs and want support to build good money habits.

The bank’s analysis looked at the spending and savings habits of over 600,000 adults, including 42,000 18-24-year-olds, to better understand factors influencing their day-to-day financial wellbeing.

18–24-year-olds were found to be 34 percent more likely to experience payment problems than the national average, and 19 percent more likely than the average New Zealander to be living paycheck to paycheck.

ASB found the overall financial resilience of this age group is impacted by the absence of a savings buffer. 30 per cent of young New Zealanders in this age group never have enough money saved to cover a single month’s worth of expenses; with 53 per cent of all 18-24-year-olds having less than $1,000 available to them in savings, compared to 41 per cent of all New Zealanders in this position.

Adam Boyd, Executive General Manager Personal Banking ASB says that today 18–24-year-olds in New Zealand are facing challenging circumstances.

“The past couple of years has been tough with COVID lockdowns and rising inflation. We know that this age group are keen to build positive financial habits and plan for their future but also want to get out and live their lives. It’s a tough balancing act exacerbated by recent economic challenges”.

Non-traditional forms of lending are being used to finance day-to-day living costs, with people in this age group 13 per cent more likely to opt for deferred payment options compared to national averages.

Mr Boyd says this is significant as there is a known correlation between short-term credit use and weaker savings habits.

“31 per cent of people in this age group are actively saving, compared with an average of 36 per cent overall. We found young men are less likely to be saving than young women.”

ASB’s research found of 18–24-year-olds who are regularly saving, 54 per cent are women and 46 per cent are men.

“We know that a regular savings habit can substantially improve individual financial wellbeing, whether this is via a traditional saving account or through investments like KiwiSaver,” says Mr Boyd.

“We were heartened to see that in addition to making regular savings, 83 per cent of ASB customers in this age group have made KiwiSaver contributions in the past 12 months, with young women slightly more likely to participate in the scheme than young men.”

Differences in investment strategies affecting men’s and women’s long term financial outcomes can already be seen in this age group, with young men more likely to invest in growth funds (53 per cent male vs 47 per cent female), while young women are more likely to opt for balanced investment options (54 per cent of 18–24-year-old women vs 46 per cent of men in this age group).

“While small, that gap is concerning as your choice of KiwiSaver fund type can have a significant influence on future wealth. We’d encourage everyone in this age group to check the fund they’re in. Moving to the appropriate fund for your circumstances is easy and could make a big difference later on.”

Young people are spending more of their money on meeting essential day-to-day living costs such as rent, food and transport compared to New Zealanders in other age groups. Rent and mortgage payments make up 20 per cent of spending on average for 18 -24s, compared with 15 per cent of overall spending on rent and mortgages for all age groups.

On average, men spend $187 more per month on transport, $55 more on eating out and $88 more on entertainment than women in this age group. Retail spending is higher for young women, with 18-24-year-old females spending on average $71 more each month on shopping than men their age.

Discretionary spending is also focused on entertainment, with the 18-24 age group spending $340 on average per month on drinking and eating out, compared to an overall average monthly spend across all age groups of $296.

“Our findings showed that while they are looking to enjoy life now, building long-term financial resilience was important for many 18–24-year-olds. They’re looking for money management insights, and they know that spending well can matter as much as saving,” says Mr Boyd.

ASB recently launched the ‘Level Up’ campaign to help 18–24-year-olds looking to boost their financial knowledge and wellbeing. Free online tools such as ASB MoneySpace lets young New Zealanders check their financial wellbeing score and make a financial game plan based on whether their goal is to spend smarter or save for the future.

“We’re also excited to be launching our Level Up podcast series, which shares real world insights from other 18–24-year-olds who have been smart with spending and are now doing the things they want to do with their money. The series shares conversations about money from young influencers, entrepreneurs, and business owners who have overcome financial hurdles to achieve their money and life goals. We want to support more young New Zealanders in feeling financially confident about the choices they’re making today.”