Financial Wellbeing Improves

New Zealanders’ sense of financial wellbeing rose in the final months of 2024, according to a survey by the country’s biggest bank.

The ANZ Financial Wellbeing Indicator score rose to 58.2, up from 57 in the previous quarter.

“For some people things are starting to improve, as interest rates have fallen from recent highs” said Grant Knuckey, ANZ Managing Director, Personal.

“While we are still a long way from the scores of 62 and over that we saw from 2019 to early 2021, things certainly appear to have stopped getting worse for some people.”

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A Financial ‘Pulse Check’

The ANZ Financial Wellbeing Index provides an overview of the personal financial wellbeing of New Zealanders and acts as a ‘pulse check’ on how Kiwis feel about their financial situation.

The Indicator Score comprises three components:

Meeting Commitments:

This measures how well people can pay their bills, mortgage or rent, and other living costs. Can you make ends meet?

This measure lifted slightly from 69.3 to 69.8.

While this is the fourth lowest score recorded in nearly five years of tracking, it is a move in the right direction. The improvement has undoubtedly been helped by the declines we have seen in the rate of inflation.

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"For some people things are starting to improve, as interest rates have fallen from recent highs."

Feeling Comfortable: The second component of the Indicator Score is whether people are feeling comfortable financially.

This also lifted, to 49.6 from 47.4 in the September quarter.

Although house prices did not move much in the December quarter, there was a lift in many financial markets, boosting KiwiSaver balances for many. 

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Resilience: The third element of the Indicator Score is resilience.

A key factor here is household savings, and over the quarter this figure lifted to a median $5,900, from a comparative low of $4030 in the September quarter. However, the Resilience element may come under pressure if unemployment continues to creep up, and we see further falls in the number of people in the workforce.

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The Financial Wellbeing model groups people into four segments- Struggling, Getting By, Doing OK and No Worries.

The good news is that we saw more people moving into the higher scoring segments, while there were fewer people remaining in the lower ones. For example, the proportion of people falling into the bottom ‘Struggling’ segment fell from 16.9 per cent to 16.0 per cent. While the top tier ‘No worries’ segment grew from 19.7 per cent to 22.2 per cent.

However, if we look back at the last two years, we see that the lift in the last quarter has only got the ‘No worries’ segment back to the size that it was in Dec 2022. While the ‘Struggling’ segment is still substantially larger now on 16.0 per cent, up from 12.6 per cent in December 2022..

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