‘Behaviours’ that boost financial wellbeing
Financial wellbeing is spread unevenly in New Zealand, according to research commissioned by ANZ that revealed four main groups of haves and have-nots.
But the ANZ Financial Wellbeing report identified some easy things many Kiwis can do to boost the health of their finances.
The bank paid for a survey of more than 1500 New Zealanders and Australians, giving each a wellbeing score from 0 to 100, depending on the details of their money lives.
Kiwis ran Australians neck and neck on their finances, with an average financial wellbeing score of 59 in both countries.
First, and most fortunate of the four groups in New Zealand, were the 23 per cent of respondents who scored between 80 and 100 and had ‘‘no real financial worries’’. These competent individuals had substantial amounts in savings, investments and superannuation, the report found.
Then there were the 40 per cent ‘‘doing OK’’, who had financial wellbeing scores from 51 to 80.
They were most likely to call their financial situation as ‘‘fair’’ or ‘‘good’’ and most felt confident about their financial situation over the relatively short timeframe of the next 12 months.
Then there were those who were just ‘‘getting by’’, a group with scores of 31 to 50, representing about 24 per cent. They lacked confidence in managing money, and did not believe they could control their financial futures.
The remaining 13 per cent were struggling. Most had no savings (79 per cent), and found it a constant struggle to pay bills (65 per cent). Almost all of them lacked confidence about their financial lives in the next 12 months.
The aim of the research, which was the fourth such study to be bankrolled by ANZ since 2006, was to work out the behaviours that could lift financial wellbeing for ordinary people.
Many contributing factors were socio-economic (such as incomes), and attitudinal (such as expectations), but the research indicated that ‘‘behaviours’’ to mirror could contribute significantly, giving many Kiwis with lower levels of financial wellbeing an action plan.
The highest-impact behaviours were regular saving and not borrowing to pay daily expenses.
‘‘The ability to start saving, even a small amount, is one of the biggest factors in people feeling higher financial wellbeing,’’ said Antonia Watson, ANZ’s managing director of retail and business banking.
Having savings boosted financial wellbeing, and the level of financial wellbeing rose sharply with the amount saved.
People with less than $1000 in savings were very likely to have a low level of financial wellbeing.
The average financial wellbeing of someone with less than $1000 saved was 35 out of 100, rising to 77 for $10,000-$19,999, and 82 for $100,000-$250,000.
Watson called for more financial capability building in schools. ‘‘Financial education needs to be integrated into our curriculum,’’ she said.
Simon Brown has been taking financial education into schools with the Banqer and Kohorts virtual money worlds.
He says participating children do show an increased tendency to form habits such as saving regularly after they have learned in the classroom about successful behaviours.
Brown can also testify to the financial wellbeing kicker than comes from being a homeowner, after taking the step himself recently with his partner Kendall Flutey, founder of Banqer.
‘‘There is a feeling of increased financial wellbeing when you own your own place, and are repaying a mortgage instead of paying rent,’’ Brown said.