The survey found 39 percent of respondents, could not access $5000 to cover an emergency within a week without going into debt. Photo: 123rf
Nearly 40 percent of respondents in a new survey are unable to access emergency funds within a week without sliding into debt, fuelling concerns people are not ready to weather the potential recession.
The annual research by the Financial Services Council surveyed 2030 people on their financial resilience.
It found 39 percent of respondents could not access $5000 to cover an emergency within a week without going into debt.
Financial Services Council chief executive Richard Klipin said that figure had increased 5 percent over the past year, which was concerning ahead of a potential economic downturn.
"I think it's reflective of the fact that things are tough," he said.
"Things are much more expensive now, people are paying more on their mortgages, they pay more for bananas, tomatoes and electricity, that's the reality of the settings that are hitting people's pockets."
The Reserve Bank last week raised the Official Cash rate by 50 basis points to 5.25 percent, meaning a belt tightening exercise would be on the way for mortgage holders, as demand continued to outstrip supply.
Klipin said despite the high cost of living, there were trade-offs between balancing shorter-term and longer-term needs and he urged people to try and put some savings away.
"It's tough to face, but it's important that people get ready and have a plan, because the next six to nine months are going to be pretty tough for all of us," he said.
"Preparing isn't just about looking after your money - it's also about looking after you and those you love."
Klipin advised anyone concerned about their finances to track their spending and speak with their whānau, friends, bank, KiwiSaver or investment provider, and to remember that markets fluctuate and undergo cycles - so the tougher times would not last forever.
