New Zealanders still rate themselves as being good with their finances, despite latest figures showing our credit cards are straining under an average of $1400 of expensive interest-bearing debt.
New Zealand MasterCard manager Albert Naffah said there was sometimes a significant difference between how sensible people thought they were and the reality of their spending habits.
“There is still a gap between those who understand the need to budget versus those who do so,” he said.
A MasterCard study of 626 customers indicated people rated their financial literacy highly.
Seventy-eight per cent of respondents believed they should keep three to six months of savings on hand in case of emergencies or unexpected events, such as job loss, and 88 per cent said it was never too early to have a financial plan.
But just 28 per cent had looked far enough into the future to plan for retirement.
“This means just under three-quarters of respondents could be entering their retirement years without adequate resources to fund their desired retirement lifestyles,” Naffah said.
Meanwhile, Mangere Budgeting Services Trust chief executive Darryl Evans said many people were struggling to see as far ahead as the next month and were paying for power and groceries with their credit cards.
“We live in this world where people think, ‘Bugger the consequences’,” Evans said.
“Everybody accepts credit these days, it’s an easy trap to get caught in.”
Evans said he had clients who had six-figure debt spread across different credit cards.
“They borrow off the MasterCard to pay the Visa, then they strip the Amex to fix the Diners.