Savings? That’s a laugh

By Peter de Waal

On 27 April this year the 6pm TV3 News reported:

  60% earn under 40,000 per annum

  88.1% earn less than 70,000 per annum

  6.8% earn 70,000 – 100,000 per annum

  5.1% earn over 100,000 per annum

The average rent for a two bedroom house in Auckland is $400/a week or $20,800 a year. For the “average” worker (see above) earning $45,000 per annum before tax, $20,800 a year represents 46% of gross income in rent alone.

Once you deduct income tax at 33%, and the extra 10% tax paid for your Student Loan on top of that (the uneducated seldom earn $45,000 per annum) what’s left for food, power, phone, car payments, etc?

International guidelines say any rental or mortgage payments over 33% of gross family income constitute true poverty and hardship. Who can raise a family, pay the vastly inflated rents or mortgage and have any money left over at the end of the week on figures like those?

Most people’s earnings are 25-50% of what they were 25 years ago in inflation-adjusted terms. So it’s a bit rich for Mike Heath – the wealthy banker from Rabo Direct, to chide workers for “failing to save” when people like him have spent the last 25 years grinding down wage and salary earners incomes in order to save the capitalist system from itself.


Unfortunately they have failed anyway, the system is on the way out. (see: http://unityaotearoa.blogspot.com/2010/03/grant-morgan-beware-end-is-nigh.html)

John Key’s electioneering call for pay-parity with Australia is a slogan that could come back to haunt him at the next election.

•••

Savings? That’s a laugh, say half of Kiwis

By Tamsyn Parker
NZ Herald
5:30 AM Tuesday Sep 21, 2010

Of the New Zealanders in a position to save for anything, saving for a holiday came top of their priority lists. Photo / Sarah Ivey


Almost half of New Zealanders are not saving at all, according to a bank survey.

Mike Heath, managing director for Rabo Direct – which issued the report – said there would be no easy solution to the problem of getting people to save more money.

The survey found 46 per cent of Kiwis are not saving. Heath said the figure had come as a surprise. Last month the Government appointed a taskforce to look at improving the nation’s savings. The taskforce is expected to report back next year.

“It will take a lot of time and incremental change - like more money in people’s pockets to enable them to save,” Heath said.

The survey found 31 per cent of respondents did not save because they had nothing left after paying the bills.

Heath said a lot of people were also focusing on reducing debt. Of those who were paying off debt the highest priority at 61 per cent was credit card debt followed by mortgage debt at 33 per cent.

“It’s good to see they are getting the message in terms of retiring debt. It seems people are actively managing their money better but they need to continue doing that.”


But the loss of savings in finance companies over the past three years appears to have had an impact on people’s priorities when it comes to security in their saving.

In 2007, the highest priority, at 72 per cent, was earning high interest rates with just 30 per cent of people considering security when investing.

But this year security of money, at 73 per cent, was the biggest priority, far outweighing high interest rates at 52 per cent.

“The finance company collapse has played a huge part in that.”

While some of the biggest companies collapsed more than three years ago it had taken a good 18 months before the message got through, Heath said.

“People are looking a lot more closely at ‘will my money be there when I need it’?” Heath believed the focus would stay on security.

“I don’t see things changing for a long time.

“People will continue putting their money into high street banks.

“I think people have been bruised. It has been significant enough that it has touched many New Zealanders.” Surprisingly, the most common reason people did save money was for going on holiday.

Heath said he had expected emergency savings for unexpected costs to be the top priority given the job security concerns over the past 18 months.

“It may be there is a need for more education to encourage people to put money away for a rainy day.”

Rabo Direct interviewed 1000 New Zealanders for the survey.

PRIORITIES

What people save up for:

* Holiday - 21 per cent

* Unexpected cost - 17 per cent
* Large purchase - 12 per cent

* Retirement - 12 per cent
* Necessities (food, clothes and bills) - 11 per cent
* Renovations - 8 per cent
* TVs and whiteware - 7 per cent

* Luxuries and entertainment - 7 per cent
* Cash investment - 5 per cent