A recent report reveals a staggering 40% increase in the number of families seeking help from financial mentors, highlighting the worsening debt crisis in New Zealand.
The second annual FinCap Voices report showcases the financial struggles faced by thousands across the country.
In 2022, 185 financial mentoring services across New Zealand supported 49,568 families. This number skyrocketed to 69,807 in 2023. The median debt of those seeking assistance rose to $14,096, an increase of $429 from the previous year.
Despite a rise in incomes last year, the cost of living crisis has nullified these gains, making it difficult for people to afford essentials like food, according to a report in state media. The report noted particular strain in Wellington and Auckland, with increased weekly deficits and higher median debt amounts.
A Wellington-based financial mentor described the situation to state media as a “drowning in debt crisis” rather than just a cost of living crisis. The report found that Māori, Samoan clients, women, and young people were the most affected by severe debt.
Debt owed to banks and telecommunications companies surged significantly, with bank debts reaching $311 million in 2023, up from $250 million in 2022. Those with car loans faced the most significant challenges, dealing with a $104 weekly deficit compared to a $17 shortfall for other clients.
Government debts also increased, with individuals owing about $100 more in 2023 than in 2022. Additionally, debt to local councils rose by $180.
Financial mentors reported that the mental health of many families is deteriorating due to financial stress. They shared stories of clients struggling with basic needs, with some unable to eat without food bank assistance.
“My biggest concern is seeing clients with a deficit even with very little debt. The cost of living is increasing, and I don’t want to start telling clients to get a second or third job just to afford essentials,” said an Auckland financial mentor. Another noted that solo mothers often find their normal expenses outweighing their income, regardless of debt.
Jake Lilley, FinCap’s senior policy advisor, attributed the crisis to a mix of poor financial literacy and the unmanageable cost of living. He emphasised that even those managing their finances well struggle to keep up with rising expenses and debt costs.
This report comes at a critical time, as some budgeting advice and financial mentoring services face potential closure due to a drop in government funding. The Ministry of Social Development (MSD) confirmed a reduction in Building Financial Services funding from $22.3 million last year to $19.5 million starting July 1, following the expiration of a pandemic-related cash boost.
Lilley stressed the importance of these services and called for increased support. “It’s quite worrying some of the challenges financial mentors are facing right now, with some not knowing whether they have a job after July,” he said.
The report’s recommendations include increasing government benefits, developing safer lending laws, cracking down on irresponsible car lending, and improving access to quality housing.
Image credit: Unsplash+
WE The People want PROSECUTIONS for the biggest crime in NZ history, leading to -among other severe repercussions- impovering a vast amount of citizens.
Where are politicians with spine to address that issue?
Where are the public prosecutors acting their oath?
Do we need revolt in Godzone to have justice?
This is a precursor for the cashless society.
This is a precursor for societal prison.
https://rumble.com/v4v6slx-wef-just-admittied-cash-will-soon-be-illegal-heres-how-their-plan-works-red.html
That’s the role of government in New Zealand, to RUIN peoples lives. Now I see this latest group of bastards want hate speech laws, because they don’t even want to hear what people have to say……
Of course, they will bang on about hatred and extremism which is kind of a hard argument to make when you send $20+ million of our tax money to a Kiev which has radical Neo Nazi’s in its ranks…..
Statistical information about the european economy has been grossly manipulated to disinform the population.
There is someone though in France ( Pierre Jovanovic) who publishes the name of companies going bankrupt and the number of people those companies employ being out of job. Scary numbers and growing by the day .
This information is public through commerce tribunals and cannot be manipulated
This is why the current tax system here in NZ needs to be scrapped, and the NZ Loyal Party Platform idea of a 1% tax initiated so that an economic recovery can begin with taxpayers using the savings generated by the 1% tax scheme to increase consumer spending of their new minimum-taxed disposable incomes as a result of the 1% tax.
Don’t look for the Uniparty in power to do anything sensible or worthwhile, especially initiating price caps and price freezes for the next 2 years; after all-
Most governments now work for Israel!
You vill own nothing and be happy. Ya?
Ve will own everything and be extremely happy. Ya?
Velcome to ze 4th Reich.