New year, new costs: Navigating financial strain as school and work continue
Emerging from recession, recent economic data offers cautious optimism about New Zealand’s trajectory amid ongoing domestic challenges, even as families face significant financial strains at the year’s start, a BNZ survey revealed.
With 48% of participants citing significant start-of-year expenses, many reported feeling overwhelmed by decisions on how to manage these costs effectively.
The survey revealed that 37% resorted to using Buy Now Pay Later (BNPL) schemes, credit cards, and other forms of high-interest credit to cope with the financial demands of school and work preparations.
“The financial pressure at the start of the year is very real, especially after the holiday period when budgets are already stretched,” said Anna Flower (pictured), executive for personal and business banking at BNZ.
High costs lead to tough choices
The BNZ survey identified the main cost drivers as stationery, transport, uniforms, and technology, with more than half of the respondents struggling with these expenses.
“For some, these pressures led to difficult sacrifices – 14% of affected households reported selling things to help meet these costs,” Flower said.
Budget services see growing demand
Claudette Wilson, general manager of North Harbour Budgeting Services (NHBS), confirmed the survey’s findings reflect their own observations.
“Parents are increasingly turning to high-interest credit options, which can create longer-term financial strain,” Wilson said.
She also highlighted a concerning trend of seniors over 65 who are raising grandchildren, experiencing heightened financial burdens as they navigate school-related expenses on fixed incomes.
Advice for managing financial pressure
NHBS encourages those under financial strain to seek help.
“Our service offers free, confidential financial guidance to anyone struggling with these costs,” Wilson said. “We can help with personalised budgeting solutions, negotiate with creditors if needed, and provide ongoing support as circumstances change.”
Proactive financial planning advised
Despite the challenges, 57% of households with start-of-year expenses have taken proactive steps to manage their finances.
“Putting aside a little each month can ease the financial pressure when these costs come around, and using a dedicated high-interest savings account can help these funds grow,” Flower said.
Tips for cost management
To mitigate these financial pressures, the survey suggested several strategies:
- Planning ahead: Set aside funds monthly and use high-interest savings accounts to accrue additional money.
- Budgeting tools: Utilise digital tools to track and categorize expenses effectively.
- Payment plans and community programs: Explore options such as school payment plans and community exchanges for uniforms and other supplies.
- Smart tech purchases: Look for special deals through schools or consider refurbished technology to reduce costs.
This comprehensive approach can help families and individuals navigate the financial hurdles of the new year more smoothly, ensuring they are better prepared for the costs associated with returning to school and work.
