In May each year, the New Zealand government announces their government budget, ahead of their new financial year which starts 1 July. It is often a time for our government to address topical financial issues for everyday Kiwis (such as petrol prices), and provide a few sweeteners if an election is looming (often by the way of tax cuts). This year, we’ve seen a trickle of pre-budget initiatives that we thought were worth sharing to make sure that you’re making the most of your hard earned money. We’ll also look at the government budget announcements and review how you can stretch your household budget further.
Increasing cost of living for New Zealanders
From increasing petrol to high grocery bills, there is no doubt that the cost of living is increasing for everyday Kiwis. Meanwhile, electricity and gas bills aren’t decreasing, nor is rent, or the cost of imported goods as supply chain pressures make items such as electronics and whiteware more expensive.
Families are feeling the financial pressure of higher bills, especially if they rely on one income, as are households with fixed incomes such as superannuitants and beneficiaries.
What is inflation?
The Reserve Bank of New Zealand describes inflation as “a rise of average prices through the economy”. In short, your money won’t stretch as far as it has done previously. In fact, the cost of living, or buying the things you usually do (food, housing, insurance, petrol), is at its highest since Stats NZ started recording the cost of living in 2008.
Income boosts for Kiwis that you can access now
Thankfully, the NZ Government has bought in some pre-Budget income boosts that can help support Kiwi households struggling to balance their household budgets. These changes kicked in on 1 April 2022.
- Minimum wage increase – $48 extra per week for full time minimum wage workers.
- Working for Families boost – changes have been made to the Family Tax Credit and Best Start newborn assistance.
- Superannuation increase – an increase of $80 per couple.
- Student Allowance and Student Loan Living Costs increase – $25 boost.
- Public transport – half price public transport for bus, train and ferry fares until the end of August 2022.
- Fuel excise tax – a reduction of 25 cents per litre for motorists filling up their vehicles until the end of August 2022.
- Winter Energy Payments – these payments are available from 1 May for those getting some sort of government support. For couples and those with dependent children, they’re eligible for almost $32 per week.
Making your money go further
If you haven’t already done so, now is a great time to create a household budget and set your financial goals for the year. Be clear on the income you have coming in the door, and any rising costs to your fixed or variable costs. Speak to your partner or household about what changes you could make to reduce costs, including trimming grocery bills or cancelling subscription services that you don’t use. Do you need new work shoes if you largely work from home now? Can you reduce your peanut butter or chocolate outgoings by changing to a cheaper brand? Is now the time to swap the car commute for half price public transport?
This could also extend to reviewing some of your larger ticket transactions for key services like insurance, power, phone plans and so on. Sorted has a detailed list of online comparison sites for services and utilities. Remember that there are often deals to be had by bundling your services (such as phone and broadband) that can also simplify your outgoings by dealing with fewer providers.
Reviewing your debt and paying down your highest interest loans can be really useful too. Here’s where a debt consolidation loan can make sense too – swapping out multiple high interest loans for a single lower interest rate personal loan.
May 2022 Budget announcements
Health and climate change have been expected to be the NZ Budget’s key focus. However, there was no escaping the rising cost of living. The good news for households this year is that they will benefit from some further government support in 2022.
All Kiwis earning less than $70,000 will receive three monthly payments of $117 from August 2022 to help with rising living costs. Why not start thinking now about how that extra money might be best spent. Do you need to put it towards your grocery bill, could you save it, or could you pay down an existing debt faster?
The welcome news of an extension to fuel tax cuts and half-price public transport was also welcome news for millions of Kiwis. For Community Service Cardholders, half-price public transport will be a permanent move.
How much can you borrow with a personal loan?
With Nectar you can borrow unsecured up to $30,000, or as little as $1,000. Use our loan calculator to find out how much you could get.
Do you need personal finance advice?
Getting your financial affairs in order or better understanding personal finance basics can be daunting. There are free services available or you can chat to a local personal finance adviser for a fee.
Getting started with Nectar
Need a great rate on a personal loan? We’d love to help with your personal loan requirements. Check out how much you could borrow and learn more about our personal loans. You can get started with Nectar and get a personalised loan quote online which will include your interest rate, maximum borrowing amount and repayment options. Borrow better, faster today!*
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