Source: MIL-OSI Submissions
Kiwis’ overall financial wellbeing has improved 8% on average since the first lockdown, largely driven by reduced spending.
But we’re still doing it tough – more than a third of Kiwis are living pay-day to pay-day and nearly half have less than $1000 in savings.
An ASB financial wellbeing study which began prior to the nation’s first COVID-19 lockdown has confirmed that Kiwis have weathered the storm, ending up on average financially better off than they were this time last year.
ASB collaborated with the University of Melbourne’s Institute of Applied Economic and Social Research to develop a measure that gives insight into Kiwis’ overall financial wellbeing, using aggregated payment, spending, balance, and credit data across more than 500,000 ASB personal banking customers.
The study of observed financial wellbeing has been underway since October 2019, offering unique insight into how New Zealanders fared during one of the most extraordinary years in the nation’s economic and social history.
University of Melbourne spokesperson Professor John P. de New, who helped to develop the research says, “We are confident our collaboration with ASB on financial wellbeing will be a valuable tool for policymakers, researchers, and the public at this critical time.
“When we first embarked on this project with ASB we had no idea we were creating such a valuable window on the nation’s financial health during the economic game changer that was COVID-19. What we’ve ended up with is a month-by-month real time barometer of the impact the pandemic had on Kiwis’ finances.”
The research offers a window into the overall financial wellbeing of New Zealanders, based on the previous 12 months of financial data from more than 500,000 ASB personal customers. The data illustrates their overall financial wellbeing has improved every month since February 2020, largely driven by reduced spending.
The percentage of Kiwis living from one pay-day to the next reduced in the year to February 2021, with 6% of ASB customers able to build up enough savings over the year to change this pattern. The ASB study also found that more than a third of customers frequently had balances of less than their average weekly expenses, and 15% of customers always spend more than 80% of their income.
A third of ASB customers had at least $10,000 in savings, up on a year ago, with 4% of customers crossing this savings threshold during the pandemic. However, the latest data for February 2021 also shows nearly half of customers have less than $1,000 in savings.
ASB Chief Executive Vittoria Shortt says, “The past 12 months have been very challenging for New Zealanders and it is good to see that collectively our financial wellbeing has held up surprisingly well.”
But she believes there are warning signs beneath the surface.
“We know we are not out of the woods yet, there are more COVID-19 effects to roll through the economy and this research highlights some concerns. The fact that more than a third of people have less than a single week’s expenses available to them and almost half have less than $1,000 in rainy day savings rings alarm bells for me. This puts them in a potentially vulnerable position.
“We know that banks have an important role to play in supporting Kiwis’ financial wellbeing and this study helps us identify the issues our customers are facing and develop initiatives to support them. That’s why, for instance, just last month we announced a commitment to keep Kiwis in their family homes by pausing any mortgagee sales through to the end of this year.
“We are also continuing to provide much-needed COVID-19 support for those that need it. While it’s pleasing to see that 87% of customers who needed COVID-19 relief during the pandemic have been able to go back to previous payment arrangements, we’re continuing to support more than 5,000 personal and business customers with COVID-19-related support.”
Findings from ASB’s New Zealand Financial Wellbeing research will be released to media quarterly.
ASB’s financial wellbeing research was developed in collaboration with the Melbourne Institute: Applied Economic & Social Research. Financial wellbeing data is captured from customer transactions on ASB held banking products. All data is anonymised and aggregated to protect the privacy of customers. The research looks at customers whose main banking relationship is with ASB (where main-bank is internally defined).
ASB has developed a tool to help Kiwis understand their own financial wellbeing. This 10-question survey asks about recent and past financial experiences and generates a personal financial wellbeing score of between 1 and 100. Responses and results from the tool are anonymous.