Two in five New Zealanders have taken on debt in the past year purely to cover the rising cost of living, according to new research released by Kiwibank on Thursday.
The bank’s State of Savings Index, now in its third year, is a nationwide survey run by Talbot Mills Research into how households budget, save and cope when the money runs short. It found 40 percent of people had borrowed in some form over the past 12 months to deal with higher living costs.
The most common way they did it was Buy Now, Pay Later. Nineteen percent of those surveyed had used a deferred payment scheme, ahead of the 12 percent who borrowed from family or friends. That matters because Buy Now, Pay Later was designed as a way to spread the cost of a one-off purchase, not as a way to get through the week.
Kiwibank chief executive Steve Jurkovich said the shift was clear in the data. “We are seeing a definite trend of people finding that they are having to turn to and use Buy Now, Pay Later in situations like supermarkets and other places where we probably didn’t historically think that Buy Now, Pay Later would be showing up,” he said.
Groceries were named as the single biggest pressure on household budgets, cited by 68 percent of people. Rent and mortgage repayments came next on 46 percent, followed by power and gas on 42 percent, filling up the car on 31 percent and council rates on 27 percent.
That list reads like a summary of the past quarter’s inflation numbers. Stats NZ reported this week that annual inflation hit 4.1 percent in the June quarter, a two-year high, with petrol prices doing much of the work as global oil prices climbed. Wages have not moved anything like that fast, so the gap gets closed somewhere, and for a large slice of households it is being closed with borrowed money.
The survey also puts a number on how thin the buffer has become. Twenty-eight percent of New Zealanders said they could not cover an unexpected $500 bill out of their own accounts without borrowing it, selling something or putting it on a credit card. A car that fails its warrant, a broken hot water cylinder or a vet bill is enough to tip more than a quarter of the country into debt.
Of the people who said they were not saving at all, 61 percent said the reason was simply that they could not make ends meet and were prioritising getting through. Among those who said saving was a struggle, 74 percent named the cost of living as the biggest single barrier.
The pressure is not evenly spread. Younger New Zealanders and renters were far more likely than others to have borrowed to cover living costs. The gap by age is stark, with the research finding 61 percent of people under 30 had taken on debt in the past year compared with 15 percent of those aged 60 and over. That is close to the difference between a household that owns its home outright and one paying market rent out of an early-career income.
Against all of that, the report’s headline finding is that habits are holding. Forty-four percent of people said they regularly saved money, up from 43 percent last year and 41 percent in 2024. Fifty-nine percent said they ran a household budget and 85 percent of those said they broadly stuck to it, a point higher than a year ago. Thirty-nine percent had made a deliberate change to save more, most often by cutting discretionary spending, changing where and how they shop for groceries, or cancelling subscriptions.
Jurkovich said the value was in starting at all. “It does really show, if you can just get started on that habit, that the habit sticks, and I 100 percent understand there are a bunch of people who wish they were in that position,” he said.
One of the more useful findings for anyone with money in the bank is about savings accounts themselves. Only 54 percent of people knew that savings accounts often carry conditions, such as making no withdrawals in a month or depositing a set amount, before the advertised interest rate is actually paid. Jurkovich put a price on the shortfall, saying his estimate is that half a billion dollars a year is missed by New Zealanders who break those conditions because, as he put it, life happens and they have to get at the money.
It is worth checking the fine print on your own account. A bonus rate that only applies in months with no withdrawals is close to useless to a household that is dipping into savings to cover the groceries, and a plain account paying a lower headline rate every month may leave you better off.
The survey picked up two newer habits as well. Twelve percent of people said they had used artificial intelligence for budgeting or savings advice, and 64 percent of those found it helpful. Fifty-two percent said they had at least some understanding of open banking, the system that lets people share their bank data with independent apps that can budget, move money or make payments on their behalf. Neither is mainstream yet, but both are moving faster than most banking habits do.
Taken together the picture is of a country that has not given up on saving but is running out of room. People are budgeting more carefully, shopping differently and cancelling what they can, and a growing share are still finishing the month short and reaching for credit at the checkout. You can read the coverage of the report on RNZ.
Have you had to put groceries or petrol on Buy Now, Pay Later, or found your savings account paying less than you expected? Tell us what you are seeing in the comments below.
This article was written by AI, briefed to report the facts, hopefully without some of the bias people bring to the job 🙂
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