A concerning picture of household finances is emerging in Novel Zealand, with new data revealing that a full 36 percent of New Zealanders have less than $500 saved, according to Westpac. The findings, released this week, highlight a growing struggle for many to build even a modest financial cushion, particularly in regions like Auckland and Northland. This lack of savings is prompting some to explore alternative investment options, even as traditional savings account interest rates remain relatively low.
The data underscores a widening gap in financial security across the country. While Canterbury and Otago residents demonstrate stronger savings habits – with 28 percent making monthly contributions and a median balance of $4200 – those in Auckland and Northland lag significantly. In these northern regions, only 20 percent are consistently saving and the median balance falls below $1500. The issue of New Zealanders’ dismal savings balances is becoming increasingly prominent as the cost of living continues to rise.
Beyond the headline figure, the Westpac data reveals further details about saving patterns. The median monthly savings amount across all customers is $150, and just 38 percent have a KiwiSaver balance exceeding $40,000. This suggests that while many are attempting to save, the amounts are often small, and long-term retirement savings remain a challenge for a significant portion of the population. The low interest rates offered on some savings accounts are also contributing to the problem, with some customers seeking higher returns elsewhere.
Warren Ngan Woo, programme manager for financial wellbeing at Westpac NZ, noted the trend toward alternative investments. “I think people are looking at those options around other sort of investment types,” he said. “When you think of platforms that are out there, those micro investment platforms that are on the market… people are sort of saying, maybe I’ll shave a little bit off my savings, put a little bit into that to have a little bit of a dabble, a bit of a go into that.” He cautioned, although, that thorough research is crucial before venturing into new investment avenues. “I always encourage people to just do your research, make sure it fits you and what you’re looking at… people should appear at other avenues, attempt not to have all your eggs in one basket but have a look at different investment classes that might suit their life and stage and their position and what their goals are now and into the future.”
Regional Disparities and Economic Factors
The stark contrast between the South Island’s stronger savings performance and the challenges faced in Auckland and Northland is linked to broader economic conditions. Ngan Woo pointed to positive economic activity in the South Island as a contributing factor. Conversely, Auckland, a major economic hub, has experienced business closures and restructuring, impacting residents’ ability to save. “Auckland being a big economic hub that it is, we haven’t been immune to a few things with business closures and the like and restructures across businesses,” he explained.
Sarah Hearn, Westpac’s managing director of product, sustainability and marketing, acknowledged the difficulties many face. “We know costs are typically higher in Auckland than in other regions and that’s reflected in this savings data,” she said. “And around the country, households and businesses continue to grapple with high costs. Saving more money might feel unrealistic for many people right now and we understand that. But taking some time to review your overall spending and making small savings commitments can have a big impact over time.” Westpac is proactively attempting to help customers by sending “nudge emails” to those with funds in low-interest accounts, encouraging them to explore better options.
Mortgages and Savings Habits
Despite the challenges, a significant majority – 81 percent – of Westpac home loan customers also maintain a savings account. This suggests that many New Zealanders are balancing mortgage repayments with a desire to build savings, even if those savings are modest. Hearn emphasized the importance of establishing good savings habits, even with small amounts. “Good savings habits can make a big difference in the long run. Even if you’re only putting aside a small amount each month, simply establishing the behaviour is a great start,” she said.
Ngan Woo struck a cautiously optimistic tone, emphasizing the importance of a positive mindset. “We’re trying to do our best to keep things as optimistic and positive as possible, it can be a self-fulfilling prophecy, if we keep talking about, ‘oh, it’s hard, it’s tough’,” he said. He encouraged people to start small and build lasting habits, recognizing that circumstances can improve over time.
The broader context of low savings rates in New Zealand is also worth noting. Recent reporting has highlighted the overall financial vulnerability of many households. For those seeking further information and guidance on managing their finances, a weekly newsletter called Money with Susan Edmunds offers insights into making, spending, and investing.
Looking ahead, Westpac will continue to monitor savings trends and provide resources to help customers improve their financial wellbeing. The next data release from Westpac is expected in the third quarter of 2026, providing an updated snapshot of New Zealanders’ savings habits.
What are your thoughts on these savings trends? Share your experiences and insights in the comments below.
