Start-Of-Year-Costs Squeeze Budgets, While Rising Fuel Prices Add To The Pressure

A BNZ survey has put some numbers behind the impact start-of-year expenses were having on household budgets.

Nearly half of respondents (47%) said they were feeling more financial pressure at the start of the year than at other times with challenged by costs for things like school and study fees, uniforms, stationery, transport, and childcare. This was before the latest Middle East crisis related surge in petrol prices impacted budgets even further.

The return to school was a noticeable pressure point at the start of the year, with 41% of those with school costs spending more than $750 this year, including 32% spending more than $1,000, with the share higher in Auckland.

44% of people who reported start-of-year costs said the expenses were more than expected. Similarly, 44% were finding it harder to manage those costs than last year.

The impact is forcing families to take a fresh look at their budgets for the rest of the year, with 33% rethinking their financial plans, and 31% expecting next year to be harder again.

And then in late February the crisis in the Middle East struck.

A recent research note from BNZ Markets shows crude oil prices rose in the order of 50-65% through March, while refined petroleum products moved even more sharply.

BNZ Executive, Personal & Business Banking Anna Flower says the findings show how a run of costs can squeeze a family’s cashflow.

“Households were already telling us they felt pressure from the usual start-of-year expenses before this spike in petrol prices fully flowed through.

“When fuel prices rise on top of school, childcare, and other regular costs, it can leave people with even less room in the budget to recover, rebuild savings, or get ahead again,” she says.

Flower says the current financial challenges highlight’s the role of good family budgeting and saving ahead for planned spending.

Nearly half (45%) of those with start-of-year expenses said they do save in advance, but some respondents were already making trade-offs.

Nearly a quarter (24%) said they delayed or changed other spending or payments because of those costs, including grocery spending (12%), healthcare spending (9%), or petrol or transport spending (6%).

Flower says the findings show some households were already making tough choices as start-of-year costs added up.

“That points to budgets with little room to absorb further increases in day-to-day costs.

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