Kiwis aged aged 18-24 are more likely to live from paycheck to paycheck, study finds
Many young Kiwis aged 18-24 are struggling to balance day-to-day living costs and want support to build good money habits, ASB’s latest Financial Wellbeing research has found.
The bank’s analysis of the spending and saving habits of more than 600,000 Kiwis revealed that 18- to 24-year-olds were 34% more likely to experience payment problems than the national average and were 19% more likely than the average Kiwi to be living paycheck to paycheck.
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The absence of a savings buffer impacted the overall financial resilience of this age group, ASB found, with 30% of the respondents never having enough money saved to cover a single month’s worth of expenses. Some 53% of all 18-24-year-olds have been found to have less than $1,000 in savings, compared to 41% of all New Zealanders in the same situation.
Adam Boyd, executive general manager personal banking ASB, said 18- to 24-year-old Kiwis today are facing challenging circumstances.
“The past couple of years has been tough with COVID lockdowns and rising inflation,” Boyd said. “We know that this age group are keen to build positive financial habits and plan for their future but also want to get out and live their lives. It’s a tough balancing act exacerbated by recent economic challenges.”
ASB found that non-traditional forms of lending were being used to fund their everyday needs, with people in this age group 13% more likely to opt for deferred payment options compared to national averages.
This figure was significant, Boyd said, as there was a known correlation between short-term credit use and weaker savings habits.
“Thirty-one per cent of people in this age group are actively saving, compared with an average of 36% overall,” he said. “We found young men are less likely to be saving than young women.”
Of the 18- to 24-year-olds who were regularly saving, 54% are women and 46% are men, the research found.
“We know that a regular savings habit can substantially improve individual financial wellbeing, whether this is via a traditional saving account or through investments like KiwiSaver,” Boyd said. “We were heartened to see that in addition to making regular savings, 83% of ASB customers in this age group have made KiwiSaver contributions in the past 12 months, with young women slightly more likely to participate in the scheme than young men.”
The study also found differences in the investment strategies of the men and women’s long-term financial outcomes in the 18-24 age group, with young men more likely to invest in growth funds (53% of men vs 47% of women), while young women were more likely to opt for balanced investment options (54% of women vs 46% of men).
“While small, that gap is concerning, as your choice of KiwiSaver fund type can have a significant influence on future wealth,” Boyd said. “We’d encourage everyone in this age group to check the fund they’re in. Moving to the appropriate fund for your circumstances is easy and could make a big difference later on.”
Compared to Kiwis in other age groups, young Kiwis were using more of their money for essential day-to-day living costs such as rent, food, and transport, with rent and mortgage payments making up 20% of their spending on average.
On average, young male Kiwis spend $187 more per month on transport, $55 more on eating out and $88 more on entertainment than their female counterparts. When it comes to retail spending, women in the 18-24 age group spend an average $71 more each month on shopping than men their age.
The data also showed that discretionary spending was also focused on entertainment, with the 18-24 age group spending $340 on average per month on drinking and eating out, compared to the $296 overall average monthly spend across all age groups.
“Our findings showed that while they are looking to enjoy life now, building long-term financial resilience was important for many 18- to 24-year-olds,” Boyd said. “They’re looking for money management insights, and they know that spending well can matter as much as saving.”
ASB recently rolled out its Level up campaign to help 18- to 24-year-olds boost their financial knowledge and wellbeing. The bank will also soon launch its Level Up podcast series, which shares world insights on how other young people from this age group have overcome financial hurdles to achieve their money and life goals.
