Edging ahead in the debt stakes

01:10, Dec 19 2012
GETTING SMARTER: Three-quarters of people surveyed had put at least some money aside in the last few months.

Attitudes to savings and dumb debt are slowly moving in the right direction, suggests a series of surveys for the country's financial literacy agency.

A Colmar Brunton survey for the Commission for Financial Literacy and Retirement Income found people are getting better at paying back personal loans and are more wary of hire purchases and store cards.

People are slightly more likely to be living within their means and financially planning for the long-term than they were in the pre-Christmas period last year.

It is the third six-monthly poll for the commission, which runs the free and independent money management website Sorted.org.nz.

It comes after latest figures from credit bureau Dun and Bradstreet showed referrals for badly overdue bills such as credit cards and utilities were down a quarter in the September quarter than in the same period last year. 

The number of people seeking budgeting help continued to soar, but some of that could be due to greater financial awareness, Federation of Family budgeting services chief executive Raewyn Fox said.


Budgeting services were still seeing people who had suffered redundancies or mortgagee sales, she said, but problem credit contracts had fallen after the financial crisis.

Retirement Commissioner Diana Crossan, who is in her final weeks in the job, said she hoped the results would be the start of a permanent improvement in savings habits.

"There seems to be a much healthier attitude among Kiwis towards dumb debt.

"It's important that as our economy recovers we maintain the good habits we're starting to adopt," she said.

"Paying off debt should be a priority, especially when it is dumb debt - that is high interest debt that could have been avoided."

Crossan said it was "fantastic" to see more people living in the black because it was "fundamental to getting ahead financially".

"More people understand that it's not a good idea to buy things that decrease in value."

Colmar Brunton interviewed 1001 Fly Buys members online from 31 October to 19 November 2012 in return for Fly Buys points.

The poll has a margin of error of 3.1 per cent. 

The proportion of respondents saying they earned more than they spent was up from 50 per cent a year ago to 54 per cent.

More people had a plan in place to achieve long-term financial goals, up from 27 per cent to 31 per cent.

When it came to debt, fewer people said they were taking out hire purchases and store cards, with the number with a retail purchase agreement falling from 27 per cent to 23 per cent.

More respondents who had recently paid off retail purchase agreements said they always did so before the end of the interest-free period, up from 85 per cent to 92 per cent.  

And more people with personal loans said they were paying back more than the minimum repayments.

But not all the of the financial news was rosy.

Fewer people - 53 per cent down from 57 per cent - said they were checking their insurance cover was right for their personal situation each year. The commission put that down to a hangover after a flurry of people checking their insurances after the Christchurch earthquakes.

People grew keener on owning shares over the year.

Three-quarters had put at least some money aside in the last few months, with two-thirds saving outside Kiwisaver.

Non-KiwiSaver investments included term deposits (32 per cent), unit trust or managed funds (18 per cent), property (19 per cent), their own business (15 per cent) and shares (18 per cent, up from 14 per cent ).

Fox said the number of people seeing budget advisers had soared to 55,000 people, up by 10,000 in the year to mid-2011 and by 13,000 in the year to mid-2012, Fox said.

People were getting to budgeting services quicker than they used to, which suggested they were thinking about their finances, she said.

The organisation has formed better relationships with some lenders, which was bringing in more referrals.