Young Kiwis aged 18-24 are the country's biggest savers during lockdown, latest bank research shows.
Financial wellbeing research released by ASB which surveyed over 500,000 of its customers from July 31 to September 30, shows compared to the COVID-19 2020 lockdown, entering the COVID-19 Delta outbreak, customers were better financially prepared, leading to a 6 percent increase in financial wellbeing.
Compared to February 2020, cash balances in September were 60 percent higher, ASB said. Across all age groups, Generation Z saved the most money.
"18 to 24-year-olds emerged as New Zealand’s strongest savers through lockdown, increasing their average cash balance by $600 (or 9 percent) during September," ASB CEO Vittoria Shortt said.
"This compares with an average of around 5 percent for all other age groups across the same period," Shortt added.
Sessions held with young people showed many were worried about being locked out of housing, and anxiety attached to financial decisions.
'FOMO' (fear of missing out) and 'FOMU' (fear of messing up) are "quite real" across the 18-24 age group, Shortt said. They were conscious of how their actions would affect them in the future and finding their own ways to save and get ahead.
As developing good savings habits early is important, rather than looking for what to spend lockdown savings on, young have an opportunity to "lock them in".
"What I hope is they lock in those savings because a lot of the research has shown good savings habits are five times more powerful than a pay rise," Shortt said.
"That's because, if you learn how to save, you can 'save for life'."
Aucklanders increased their average cash balances by 5.4 percent in September, slightly higher than those outside the region, whose balances grew by 4.8 percent, ASB said.
Reflecting COVID-19 alert level 4 and level 3 restrictions in Auckland, spending from customers' accounts dropped 22 percent in September, compared with 5 percent for the rest of New Zealand.
But despite improved average cash balances, research showed 38 percent of ASB's customers were living pay-day to pay-day. Almost half (49 percent) appeared to be 'having trouble' or were 'just coping'.
Around 40 percent of customers had less than $1000 in savings (a slight improvement from 48 percent last year). For some, saving a rainy day fund can seem an impossible task, but the bank suggests chipping away at it, bit by bit.
"We're encouraging everybody at a minimum to tuck away $1000 which will just take the pressure off."
For those tempted to overspend, simple tips such as using electronic bank alerts can give people a better idea of where their balances are at, Shortt said. Another tip is to put a small amount into a savings account every time money is spent.
"Then if you've got a bigger purchase coming up, you can dip into that rather than incur fees with overdrafts," Shortt added.
ASB's survey is quarterly and results are based on how people feel about their finances, along with aggregated real customer data.
People with spare money to save or invest are wise to consider their goals and timeframe, compare different products - and get professional advice if unsure.
