News | Features
29 Nov 2021 21:02
NZCity News
NZCity CalculatorReturn to NZCity

  • Start Page
  • Personalise
  • Days of Xmas
  • Sport
  • Weather
  • Finance
  • Shopping
  • Jobs
  • Horoscopes
  • Lotto Results
  • Photo Gallery
  • Site Gallery
  • TVNow
  • Dating
  • SearchNZ
  • NZSearch
  • RugbyLeague
  • Make Home
  • About NZCity
  • Contact NZCity
  • Your Privacy
  • Advertising
  • Login
  • Join for Free

  •   Home > News > Business > Features

    Are we Bad Savers, or was it a Bad Survey?

    A recent report on New Zealanders’ savings habits annoyed me – and not because it starts by saying that the Savings Working Group, of which I’m a member, “is likely to face a tough challenge”. What got my goat was its misleading conclusion.

    The survey, by RaboDirect, found that 46 per cent of New Zealanders over 18 are not saving – a finding that got considerable media coverage.

    That sounds alarming, until you realise how the bank defined saving. I have two problems with this.

    The first concerns KiwiSaver. The survey found just 12 per cent are saving for retirement. How does that tally with the fact that 37 per cent of adults belong to KiwiSaver?

    Says a RaboDirect spokeswoman: “The question people were asked was what they do with any money left over after paying their usual monthly expenses. The low ‘12 per cent’ response may be an indication that when answering that question, people typically considered their KiwiSaver contributions as a ‘usual monthly expense’, rather than as an additional saving.”

    She goes on to say that researchers did ask questions about KiwiSaver, although RaboDirect didn’t publish that information in this report.
    “The results showed that a) only 61 per cent of KiwiSavers said they were saving or investing, and b) only 16 per cent of KiwiSavers said they are saving for retirement.”

    Hmmm. Is it fair to say only 46 per cent are saving when you know that – because of the way you asked the question – many respondents aren’t counting KiwiSaver as saving?

    My second problem is how narrowly RaboDirect defined saving. To my mind, saving is anything that will increase your financial wealth. And the best measurement of wealth is net worth – which is assets minus debt.

    To grow your net worth, you can either accumulate assets or you can decrease your debt. And if we include people in the survey who are repaying debt – mainly credit card debt or mortgages - the percentage who aren’t saving drops to 34 per cent.

    But that’s not all. I reckon saving should also include spending on education. When you study you are usually adding to your assets – the particular asset being the ability to earn a higher income for the rest of your life. That can make a huge difference to total wealth.

    And what about spending to build up a business? A percentage of those who said in the survey they have no money left after expenses will be putting every spare penny into a business. And while many small businesses fail, others grow to be significant assets.

    Not surprisingly, the survey made no mention of saving by spending on education or on business. But if we did include those activities, plus KiwiSaver, I suspect the percentage not saving would drop below 25 per cent.

    Let’s look at this non-saving quarter of the population. A good chunk will either be retirees, who are not expected to save, or those who don’t need to save further.

    This latter group includes not only wealthy or frugal people who have stashed away many thousands of dollars, but also low-income people with no savings.

    How come? Well, New Zealand Superannuation is generous by international standards, so many people find their income rises when they start receiving Super. It doesn’t make sense for them to put away money before they retire – making life tough now in exchange for relative luxury later.

    That leaves us with a pretty small percentage who are non-savers who should be saving.

    Rather than facing a tough challenge, perhaps the Savings Working Group should congratulate the country on how widespread saving is – although there’s still the issue of whether people are saving enough.

    © 2021 Mary Holm, NZCity

     Other Features News
     10 Sep: Spring clean your finances
     13 Aug: Plan ahead to give yourself a debt-free Christmas!
     10 Jul: Wise up to clear credit card debt
     07 May: Ways to prepare for the unexpected
     30 Mar: Time for a financial progress check
     10 Feb: Studying up on NZ Super
     10 Jan: Managing the back-to-school bills
     Top Stories

    British and Irish Lions coach Warren Gatland's not buying talk of a shift in the power balance between the north and southern hemisphere teams More...

    A final cash injection for hard hit businesses transitioning to the traffic light system.. More...

     Today's News

    Simon Cowell thinks his e-bike is “brilliant”, despite breaking his back on one last year 20:35

    Living & Travel:
    Australia's fashion industry mourns Louis Vuitton designer Virgil Abloh 20:13

    Mike Tindall called his son’s christening “a lovely day” 20:05

    Dame Diana Rigg was "not scared" of dying 19:35

    The seven original adult cast members of 'This Is Us' have received a $2 million bonus 19:05

    British and Irish Lions coach Warren Gatland's not buying talk of a shift in the power balance between the north and southern hemisphere teams 18:53

    Kim Kardashian West and her daughter have joined TikTok 18:35

    A dream start for the Black Caps to day five of the first cricket test against India in Kanpur 18:33

    Prince William didn't like to "burden" his family with the "stresses and strains" of work as an air ambulance pilot 18:05

    Rugby League:
    Kiwis hooker Brandon Smith might have some making up to do with Storm coach Craig Bellamy, with officials privately seething after their hooker's glowing praise of the Sydney Roosters 18:04

     News Search

    Power Search

    © 2021 New Zealand City Ltd