How to manage rising living costs

First it was a pandemic and lockdowns, then the average Kiwi household’s cost of living hit a 32-year high in June 2022—. It kind of feels like we can’t catch a break.

So, why is this happening, what can you do and where can you get support?

One word. Inflation. Inflation refers to a generalised increase in the price of goods and services in the economy. Essentially, inflation means the cash you have today won't be able to buy as much in the future. The Reserve Bank of New Zealand (RBNZ) sets interest rates to achieve low and stable inflation, so that consumer prices only rise 2% on average each year. But currently, annual inflation is 7.2% – nearly the highest since the 1990s. Why? One other word. COVID. 

The pandemic brought the world to a screeching halt. However, the economic responses in many countries, including New Zealand, meant that most household incomes remained broadly intact. But because we couldn’t spend during lockdowns, household savings surged. 

Then, as countries opened up, consumer demand for goods surged, straining COVID disrupted supply chains, which couldn’t keep up. This, paired with global issues like the conflict between Russia and Ukraine, has driven up prices around the world. Domestically, the housing boom over 2021, and surging wage growth from the tight labour market, have further contributed to the high-inflation environment. 

Try cherry picking from the following to help navigate your way through rising costs.

Now’s the time for a little financial housekeeping. Planning your spend and creating or revisiting your budget is a good starting point. This will give you some clarity around money coming in and going out, and might help you spot areas where you could cut back.

Need help reviewing your finances? Call 0800 269 296 to book in for a free virtual or in branch appointment with an ANZ Personal Banker. If you’d prefer, MoneyTalks also provides free, confidential and non-judgmental budgeting services throughout New Zealand. 

It’s likely that groceries will be one of the biggest expenses in your budget. This can be tricky, because they’re a must-have, but there are some ideas that could help you keep costs down. From meal planning to buying in bulk, see how you could cut your grocery bill with these six hacks. 

We’re all feeling the pinch at the pump. Consider jumping on the bus, train or ferry instead. If you need to fuel up, Google one of the handy apps that track the cheapest petrol prices near you.

When it comes to products and services there are always deals to be had. Shop around and take advantage of the best offers, or see if your existing provider can cut you a better deal. We’ve also pulled together some other ways to save without sacrificing the things you love.

Ignorance isn’t bliss when it comes to making savings. So, review your recent transaction history, including your direct debits. Hidden among the must-haves, are there some automatically billed apps or services that you could cut? Making some quick decisions about what stays and what goes could help you tidy up and save on subscription services. Small savings add up.

A home loan is usually a long-term arrangement, and we understand that financial situations change over time. Cost of living increases, rising rates and other unexpected events, can make it harder to meet your mortgage repayments. Here are some strategies that could help you manage your home loan in a changing economy.

Staying on top of debts can feel daunting when the cost of living keeps rising, but used in the right way, debt can be really useful. From taking advantage of lower interest rate products or balance transfers to debt consolidation, we’ve got some useful ideas for managing debt that could help you make the most of your money. And if you’re struggling to stay on top of your credit card, our understanding credit cards articles could help – from tips to minimise credit card interest to understanding interest-free days. 

Don’t wait until you’re in financial trouble if you can see it coming. The earlier you talk to us the better. If you’re finding that rising costs are making things unaffordable, there are a number of ways we may be able to assist. Find out how we can help with financial difficulties.

Additionally, if you’re experiencing a hardship event (e.g. loss of job, illness, a relationship breakdown), you may be eligible for financial hardship assistance. Our dedicated team can work with you and provide information and support that may help you get back on track. 

We recommend you check what financial support is available from the government. If you’re struggling to meet your living costs, Work and Income may be able to help with:

• Housing costs; including help to pay rent or other accommodation costs
• Food costs
• Power, gas, water bills or heating
• School costs; including uniforms, stationary and school fees
• Urgent or unexpected costs. 
  

Price rises might feel uncomfortably high right now, but inflation is expected to decline over the next few years due to the RBNZ aggressively hiking interest rates (essentially pumping the economic brakes to slow down demand). It’s a good idea to plan now for when inflation does ease, so you can put your money in better long-term shape. It’s important to remember that financial wellbeing isn’t about how much you’ve got. It’s about making the most of what you have in both the good and the not so good times.