Are Kiwis overconfident about their finances?

According to recent research* from the Financial Services Council (FSC), Kiwis’ financial confidence is growing, but there are signs that this confidence may be misplaced. So, here’s what the survey found.

Confidence vs reality

Earlier this year, as many as 86% of respondents said they were reasonably-to-extremely confident about their finances, up 8% from 2020. But despite encouraging levels of financial confidence, other findings painted a different picture.

About 30% of people surveyed said they could only last for a month or less without earning an income. What’s more, 40% of respondents didn’t know if they could raise $5,000 in a week in case of emergency; and 45% said they would need to rely on friends or family if they were out of the workforce for more than three months.

Financial resilience in tough times

All this seems to indicate that, while New Zealanders are emerging from the pandemic more confident, financial resilience is still out of reach for many. And the current level of inflation is likely to make saving even more problematic.

“What the research tells us is there are some clear warning signs that there is a perfect storm brewing due to financial overconfidence, insufficient rainy-day funds or retirement investments and economic uncertainties such as rising interest rates and inflation,” FSC CEO Richard Klipin explained. “Factoring in how the economic environment has significantly changed since January this year, it is likely that the present picture is even more concerning.”

Quality advice makes a difference

How is your financial resilience? Remember: you don’t have to go it alone. In times of uncertainty, having a financial adviser in your corner is all-the-more important. We can help you put things in context, understand the benefits and risks of your decisions, and gain more solid confidence in your financial life. Get in touch: we’re here to help.

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‍*Methodology: The research was conducted via an online survey developed and hosted by CoreData. Data was collected in March 2020 (2,000 valid complete responses); August 2020 (1,000 valid complete responses), April 2021 (2,035 valid complete responses) and January 2022 (2,000 valid complete responses).‍

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The information contained in this publication is intended for general guidance and information only. It has not been personally prepared for you. Therefore, you should not act on this information if you have not considered the appropriateness of this information to your personal objectives, financial situation and needs. You should consult with us before making any investment decision. Historical market performance may not be indicative of future market performance.