The cost of living in New Zealand is going up faster than wages, putting finances under increased pressure.
But there are things people can do to make their money go further, budgeting experts say.
Inflation is at a 30-year high, consumer prices rising 5.9 percent in the last three months of 2021 compared to the same period in 2020, according to StatsNZ figures. Petrol prices, along with rent and mortgage costs, are having a huge impact on Kiwi households. Wage rates are slow to catch up, growing 2.6 percent over the same period.
Two budgeting experts Newshub spoke to said the level of price rises means a growing number of Kiwis can't afford the basics.
Many had taken on high-interest debt and multiple buy now, pay later loans, which they struggled to keep track of and repay.
Sam Farquhar, service coordinator at Henderson Budget Service and Nicola Eccleton, manager social inclusion at Good Shepherd suggest five ways Kiwis can take control of their money as prices ramp up.
1. Review spending
Good money management starts with being aware of where money is going.
Once people are aware of how much they're spending, they're able to make changes, Nicola Eccleton said.
"Information is power…if you can go through your statements and work out what's negotiable and what's not and how you can pull some of those costs down, it makes you feel better," Eccleton said.
A budget helps people plan where their money is going. It shows money coming in each month (income), money going out (expenses), and the amount left over for spending and saving.
"Having a budget is huge…the way to start is to go through your bank statements (ideally 3 months' worth) and work out where you are," Eccleton added.
2. Set a goal
Setting a money goal, even a small one, can be empowering.
It provides a reason for saving and something to look forward to.
"It might be as simple as having $15 left at the end of each week and after three months we're going away for a night," Eccleton said.
Rather than feel guilty about saying 'no', parents of children can set aside "discretionary money" (e.g. $5 or $10 each week), and involve them in how it will be spent.
"The important thing to do is not create a situation where there's 'deficiency thinking', but framing things as 'choice'," Eccleton said.
3. Create an emergency fund
Having an emergency fund - spare money that can be accessed quickly - provides peace of mind.
It avoids having to max out a credit card, or apply for a loan to cover an unexpected bill.
Sam Farquhar suggests opening a separate account and putting in an affordable amount of money each week.
"It might be a [very] small amount but it builds up over time…that could just be emergency money so instead of reaching for your credit card, you're reaching for that," Farquhar said.
4. Manage high-interest debt
People who have multiple high-interest loans could look at combining them into one debt at a reduced interest rate to make repayments more affordable.
Some credit card providers offer interest-free periods on transferred balances. Organisations such as Ngā Tāngata and Good Shepherd, providing low or no interest loans to eligible applicants.
"Do your research and look at combining all your repayments into one debt at a reduced amount," Farquhar suggested.
"If you're struggling to pay existing debts, negotiate payment plans with your creditors to avoid getting hit with more interest and fees."
5. Consume wisely
Here are some ways people can save money on everyday costs:
- Shop around for groceries (e.g. compare prices across Pak'nSave and Countdown, use local veggie shops).
- Swap to supermarket home brands and cut out excess snack and packaged foods.
- Shop once a week or less (avoids buying extras on quick trips).
- Switch takeaway coffee for boxed coffee sachets.
- Plan a menu for the week and cook at home (including lunches).
- Go 'meat free' and look up healthy alternatives online.
- Get involved in a community vegetable garden.
- Use the Gaspy app to find cheaper petrol prices.
- Compare power prices online at Powerswitch.
- Compare broadband costs across internet providers.
- Use free WiFi (e.g. at libraries and shopping centres).
- Talk to your mobile provider about whether your plan is right for your usage.
- Avoid upgrading your mobile each time the contract ends.
- Plan ahead for Christmas (e.g. 'Christmas Club' cards are available through places like The Warehouse, and supermarkets).
People wanting help managing expenses could contact Money Talks, a free financial helpline, a community budgeting service or Citizens Advice Bureau. Free budgeting tools can be found on websites such as Sorted.
