Photo: Yiting Lin / RNZ
Consumers are being urged to set up a spending plan for the holidays to help manage increased cost pressures and avoid taking on debt.
A survey of nearly 1100 Westpac customers indicates 72 percent were extremely or moderately concerned about the cost of living, with nearly half (45 percent) planning to spend less over the holidays.
While most households had taken some measures to manage costs over the summer season, 38 percent had taken no action to deal with additional costs.
Westpac financial wellbeing programme manager Warren Ngan Woo said it was never to late too set up household budget to cover such things as back to school supplies and other essential new year expenses.
However, just 27 percent of those surveyed had set up a budget for holiday season spending, which compared with 23 percent last year.
He said it was important to involve all members of the household in setting up a budget.
The survey indicates more than 20 percent of households expected the new year period to be more financially stressful than the same time last year, with just 5 percent expecting it to be less stressful.
While interest rates were coming down, Woo said it was critical for indebted households to avoid taking on any additional debt over the holidays.
Still, the survey indicates one in six (14 percent) plan to spend more this year on decorations, travel, accommodation, gifts and fun activities outside the home, which were the most common areas identified for reductions.
Woo said cutbacks in household discretionary spending would also affect businesses, who typically make most of their profit in the December through January holiday season.
He said consumers could consider supporting their local businesses when making buying decisions.
"Because they are just like us, mums and dads who are running the business, and I really encourage people to get out there to support them as well."
Westpac NZ managing director for consumer banking and wealth Helen Ryder said there were many resources available to help consumers budget and manage debt.
She said about a quarter of Westpac's fixed home loan customers would have rolled onto a lower mortgage interest rate by the end of the year, with 60,000 floating home loan customers seeing interest rates fall by a total of 1.25 percent since July.
However, she said budgets remained tight for many households with many still coping with high interest debt and increased household costs.
