A BNZ survey has put some numbers behind the impact that start-of-year expenses were having on household budgets.
Nearly half of respondents said they felt more financial pressure at the start of the year than at other times, due to school and study fees, uniforms, stationery, transport, and childcare. This was before the latest Middle East crisis-related surge in petrol prices further impacted budgets.
The return to school was a notable pressure point at the start of the year, with 41 percent of those with school costs spending more than NZD 750, including 32 percent spending more than NZD 1,000, with the share higher in Auckland.
44 percent of people who reported start-of-year costs said the expenses were more than expected. Similarly, 44 percent were finding it harder to manage those costs than last year.
The impact has forced families to take a fresh look at their budgets for the rest of the year, with 33 percent rethinking their financial plans, and 31 percent expecting next year to be harder again. And then in late February, the crisis in the Middle East struck.
A recent research note from BNZ Markets shows that crude oil prices rose by 50 to 65 percent through March, while refined petroleum products moved even more sharply.
BNZ Executive, Personal & Business Banking Anna Flower said the findings showed how a run of costs can squeeze a family’s cash flow.
“Households were already telling us they felt pressure from the usual start-of-year expenses before this spike in petrol prices fully flowed through," she said.
“When fuel prices rise on top of school, childcare, and other regular costs, it can leave people with even less room in the budget to recover, rebuild savings, or get ahead again."
Flower added that the current financial challenges highlighted the role of good family budgeting and saving ahead for planned spending.
Nearly half of those with start-of-year expenses said they do save in advance, but some respondents were already making trade-offs.
Nearly a quarter said they delayed or changed other spending or payments because of those costs, including grocery spending (12 percent), healthcare spending (9 percent), or petrol or transport spending (6 percent).
The findings also showed that some households were already making tough choices as start-of-year costs mounted. That points to budgets with little room to absorb further increases in day-to-day costs.
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