How’s Your Financial Resilience? – A Reality Check

How’s Your Financial Resilience? – A Reality Check


By Glenn Weston, AFA2 July 2020

How are you thinking and feeling about your financial affairs in these uncertain times?

Financial resilience is your ability to adapt and survive financial hard times. Many of us will face money troubles at some point in our lives and it helps to build resilience before we need it.

The Financial Services Council recently released the initial findings of an index survey[i] to understand how financially resilient we are and how our resilience had changed between March 2020 with the onset of COVID-19 and late April 2020, as New Zealand’s Alert Level began to drop. This research aims to build a better understanding of exactly how Kiwis are thinking and feeling now (and in the months ahead) about money and other everyday financial concerns. It highlights the importance of these issues being discussed at a national, community and household level to ensure we’re all better equipped to make the right financial decisions for ourselves and to become more financially resilient to future shocks.

The responses show COVID-19 has impacted Kiwis’ financial resilience, in particular relative to job security, money issues and mental well-being. The initial findings are concerning and there is likely worse to come as the full effects of the economic recession bite.

The survey tracked the views of 2,000 Kiwis on five key financial resilience indicators:

  • Financial Confidence – 45% of us lack confidence in making financial decisions, up 15% in a month
  • Financial Literacy – market volatility due to COVID-19 changed how we invest, with Kiwis seeking low-risk investments, up 20% in a month
  • Financial Preparedness – even before COVID-19, over 50% of us didn’t feel on track for the retirement we’d be happy with and expected to work past our preferred retirement age
  • Job Security – 50% of us feel COVID-19 is impacting our job security, up over 15% in a month
  • Well-being – over 40% of us now worry about money, which is taking a toll on our mental health

The survey identifies the loss of financial resilience affects all age groups and points to a challenging outlook for many Kiwis preparing for retirement. Contrary to these findings, some NZ media have reported financial literacy improved during lockdown pointing to an upsurge in new investors subscribing to online share platforms. However, evidence of more investor activity does not mean increased financial literacy, and the ease with which investors can join the market online (whilst convenient) comes with the risk of poorly-researched investment decisions, over-trading and the potential for negative surprises.

So what could help you right now to make a meaningful difference to how you think and feel about your financial resilience? It’s the same now as always; its good advice. Planning ahead and investing wisely can help you gain more control over your financial future and to live the life you want, even through times like now.

Even if you think and feel you have everything under control, it’s smart to be proactive and review your financial affairs during times of crisis. Often it’s a case of you don’t know what you don’t know and you may not have all the information needed to make the right financial decisions. And with emotions running high as a result of job loss or the potential for it, you may need help to address questions like:

  • What steps do I need to take to improve my overall financial position?
  • What are my options to improve my financial position if I lose my job?
  • Is my Kiwisaver and/or work-place savings scheme invested in the right option for me?
  • Am I taking too much risk with my investing or perhaps not enough?
  • Is my debt well-structured to minimise its long-term cost?
  • What scope do I have to reduce outgoings and increase savings, for instance to build a cash reserve?
  • Are my financial affairs tax efficient?
  • Are my investments suitable to achieve my goals and objectives?
  • Are my current insurance policies up to date and is the cover and cost right for me?
  • Are the ownership structures of my personal and/or business affairs still appropriate?

If you think or feel you’re unsure of what you should do, then seek advice. The team at Saturn Advice would be happy to speak with you. Call them on 0800 757 858.

The views expressed in this article are the views of the author. The information provided is of a general nature and is not intended to be personalised financial advice. You may seek appropriate personalised financial advice from a qualified Authorised Financial Adviser to suit your individual circumstances.