August 01, 2011
Auckland, 01 August 2011- New research of consumer sentiment in New Zealand has revealed that Kiwis have become consciously cautious about retaining adequate savings for a rainy day and are actively monitoring their personal finances.
In an annual survey of 626 consumers conducted on behalf of MasterCard, 78 per cent of respondents said they believed that they should keep between 3 months and 6 months of personal savings on hand in case of emergencies or unexpected events, such as job loss.
The finding suggests that consumers are taking a closer interest in their financial wellbeing and becoming more prudentially cautious against a backdrop of locally subdued economic conditions and economic volatility in the US and Europe.
MasterCard’s New Zealand country manager, Albert Naffah says the findings showed many Kiwis highly rated their own level of financial literacy. Of those surveyed, 88 per cent agreed it was never too early to have a financial plan and that regular savings were important.
“Most people (81%) in our survey reported they understood the information provided in financial statements and regularly compared financial products to select the best one for them.
“This shows a high number of people are thinking about their financial futures and actively managing their money - taking the time to learn about where their money is going. These results are a positive sign that New Zealanders are taking responsibility for understanding their financial positions.”
This cautious behavior is also exhibited in the latest edition of the MasterCard Papers series derived from Statistics NZ and the RBNZ payments data that shows that the percentage of New Zealand credit card balances accruing interest are at their lowest levels seen since 2008.
“KiwiSaver may have also had a positive influence on long-term financial planning with just over quarter (28%) of our sample saying they had calculated how much money they’d need to retire. However, on the flip side this means just under three quarters of respondents could be entering their retirement years without adequate resources to fund their desired retirement lifestyles.”
Mr Naffah says he was also encouraged at how savvy people perceived they were with not just long-term financial planning, but also day-to-day money management — although he cautioned that there is sometimes a gap between how financially literate people think they are versus reality.
“Most people in our survey understand the need to budget their day-to-day finances and to actively keep track of their spending on a weekly or monthly basis. However, there is still a gap between those who understand the need to budget, versus those who actually do so. The good news is that the availability of up-to-date information through internet banking makes budgeting and financial management more clearly visible and easier to manage, and this may be a reflection on why more than half our respondents now choose to do almost all of their banking exclusively online.
“Our survey shows New Zealanders are becoming increasingly active and savvy financial planners. Comparing products, monitoring investments and planning ahead will stand people in good stead for their financial futures.
“Getting the right financial advice for individual circumstances is also an important factor. I encourage people to seek qualified, independent financial advice or to visit online financial planning resources such as the Sorted.org.nz website to help them manage their finances.”
- 88 per cent of people surveyed said it was never too early to have a financial plan
- 92 per cent agreed that regular monthly savings are important
- 81 per cent reported they understood most of the information provided in financial statements
- 78 per cent said they compare financial products to select the best one for their circumstances
- 55 per cent said they regularly monitor their investments
- 28 per cent said they had calculated the amount of retirement funds they will need at retirement age
- 88 per cent of people surveyed agreed that they had the ability and understanding to budget their day-to-day finances
- 76 per cent of people surveyed say they keep track of their spending on weekly or monthly basis
- 77 per cent said they understand the concept of how interest is compounded
- 60 per cent of people surveyed do 81-100 per cent of their banking online.
MasterCard (NYSE: MA), www.mastercard.com, is a technology company in the global payments industry. We operate the world’s fastest payments processing network, connecting consumers, financial institutions, merchants, governments and businesses in more than 210 countries and territories. MasterCard’s products and solutions make everyday commerce activities – such as shopping, traveling, running a business and managing finances – easier, more secure and more efficient for everyone. Follow us on Twitter @MasterCardNews, join the discussion on the Cashless Conversations Blog and subscribe for the latest news.