21 August 2005
Bank of New Zealand Survey Lifts Lid on Financial DNA Of New Zealanders
Remember last weekend when you saw the couple arguing quietly but furiously in the furniture store about whether to spend $4,000 on a new lounge suite? She says: “Damn it, buy it. You only live once.” He says: “But we haven’t budgeted for this and we haven’t checked out all the prices in town.” Well, the news is that those two probably can’t help but argue over financial decisions. At heart, they have different attitudes to money that are part of their respective psychological make-up.
A survey by Bank of New Zealand has lifted the lid on the financial DNA of New Zealanders and their underlying attitudes to money and finance. Bank of New Zealand undertook the survey to find out more about how New Zealanders feel about their money, how they make big financial decisions, and from whom they take financial advice.
The survey was conducted for Bank of New Zealand by UMR Research. Five hundred people, aged 18 years or more, were surveyed by telephone across the country. The margin of error is plus or minus 4.4%.
The results of the survey are surprising. Overall, the majority of New Zealanders see themselves as financially conservative. The vast majority of us say we don’t like high risk investments, we make our own decisions on major investments choosing not to take professional advice, we plan ahead carefully, and we prefer not to have debt.
Many of us regard money as a necessary evil. Based on the survey results, nearly 55% of New Zealanders say they would prefer to watch television or do some exercise rather than sort out their finances. More than 10% of people say they prefer visiting the dentist to concentrating on their finances.
The survey indicates that half of us barely look at our bank statements, preferring to put them away in case we need them later. A further 8% of us say we glance at bank statements and then throw them out, 2% of people throw the statement out without opening them, and 1% of people say they are too scared to look at their statements. Overall, according to the survey, at least 11% of people have little or no idea how much they have in the bank or how they are spending their money. These people don’t know the first thing about their finances.
The remaining 38% of people say they review their statements thoroughly, taking note of spending and adjusting their budgets accordingly.
Bank of New Zealand’s General Manager of Personal Financial Services, Blair Vernon, says the report card that emerges from the survey includes some good news and some not so good news on New Zealanders and their attitudes to their personal finance.
“Overall, New Zealanders recognise that wealth is something you have to earn and plan for. So, it’s worth putting effort into your personal finances and looking after your finances carefully. That’s good news.
“On the other hand, some of us are reluctant to face some issues about our finances and we’re reluctant to take professional advice. Some of us try to hide from the facts even though we know we should be paying more attention to our finances,” Mr Vernon says.
“One way to think of your wealth is that it is comparable to your physical health. If you are willing to take professional advice and care regarding your health then why wouldn’t you do the same with your wealth?”
Bank of New Zealand’s survey shows that the population can be divided into four basic financial personality types. Rarely does a person fit neatly into one type; most people have their psychological base in one type and they show characteristics of at least one other type.
The four basic types are:
Fun lovers, who make up a little less than a quarter of the population. Fun lovers see themselves as fun-loving and carefree. They are less likely to research options before making a major purchase. They live for today, they love a good party, and they see money as providing freedom and enjoyment. On average, fun lovers are more likely to be young people and they are more likely to work in one of the professions Heartlanders, who make up 43% of the population. These people are careful about their investments and they prefer not to be in debt. Relatively speaking, they are more willing to seek financial advice. Heartlanders are focussed on their families and providing for those families; in short, they are the people who keep New Zealand running at a steady and reliable pace
Strategists, who make up a little less than a quarter of the population. Strategists thoroughly research options before making a major purchase, they plan ahead carefully, and rarely do they spend more than they can afford. They are often ambitious and forward-thinking people
Go-getters, who make up about 13% of the population. On average, go-getters are more likely to see making money as an exciting means of providing independence and freedom, and they are more likely to respect wealthy people. Go-getters see themselves as people who have great business ideas and get them off the ground. They love new things, especially the latest in technology. Of all the financial personality types, go-getters are more likely to live in Auckland and they are more likely to be men
In all likelihood, the woman in the furniture store last weekend was a fun lover, and her partner was probably a strategist.
“There is no reason why people of different financial personality types can’t get along,” says Mr Vernon. “But it’s helpful to recognise and understand your own attitudes to money and wealth and those of the important people in your life.”
Other major findings in the Bank of New Zealand survey are:
New Zealanders say they research major purchases thoroughly: 79% of New Zealanders say they thoroughly research options to ensure the best deal before they make a major purchase. Fun-lovers are the least likely to undertake such research; 45% of them said they researched major purchases relative to 94% of strategists who say they research major purchases
The majority of New Zealanders say they don’t take advice on money matters: 71% of them said they preferred to make their own decisions about savings and investments. Heartlanders are the people most likely to take advice; 34% of them say they take advice on money matters; on the other hand, go-getters are less likely to take advice: 10% of them say they take advice
When New Zealanders do take financial advice, professional financial advisors are the most likely source of advice (36% of respondents said they were most likely to take advice from a financial advisor relative to other potential sources), followed by family members (26%), bank managers (25%), and friends (7%). One per cent of people said they would take advice from an astrologer
New Zealanders say they prefer not to be in debt: 60% of people say they would prefer not to be in debt at all. Nearly 70% of fun lovers say they feel some debt can help them achieve their goals, while 23% of heartlanders say they feel some debt can help them. Nearly 75% of New Zealanders say they never spend more than they can afford
Borrowing money from your friends is apparently frowned upon in New Zealand: 79% of people say they have never borrowed from friends, and of those who have, 90% always paid it back. If you prefer financially reliable friends, choose the heartlander or fun lover– nearly all of them said they paid their friends back