Four in 10 Kiwis are one $5000 emergency away from debt. How do you compare?

Saturday, 4 July 2026

New data released by the IRD shows that a growing number of New Zealanders are dipping into their retirement savings just to get by.

Forty percent of New Zealanders cannot access $5000 for emergencies without incurring debt, a figure unchanged in three years.

Despite improving financial literacy and strong retirement savings like KiwiSaver, everyday financial resilience remains fragile.

Experts recommend automating short-term emergency funds to help weather sudden economic shocks without derailing long-term stability.

ANALYSIS: Four in ten New Zealanders could not access $5000 within a week without going into debt if they needed it for an unexpected emergency.

This is one of the key metrics in the latest edition of the Financial Resilience Index from the Financial Services Council (FSC).

Even more concerning is that this number has remained flat over the last three years, indicating New Zealanders have been unable to make any progress in this area.

At the same time, household savings also declined, particularly among those with lower levels of accumulated savings.

These stats make no secret of how hard the last three years have been for your average New Zealander.

The cost-of-living crisis has bitten hard, affecting New Zealanders across economic brackets, including those who have savings.

The cohort of Kiwis holding $50,000 or less has dropped significantly in a year from 31% in 2025 to 23% in 2026. Similarly, the $50,001 to $150,000 cohort fell sharply from 31% in 2025 to 17% in 2026.

And although we did see a slight improvement, a substantial portion of the population remains highly exposed to income disruption. In 2026, a quarter of New Zealanders reported that they could survive for less than a month without earning an income.

This paints a picture of New Zealanders across the board either taking backward steps or remaining in the same place.

FSC chief executive Kirk Hope tells me the money issues are having the largest impact on young New Zealanders.

“While 65% of New Zealanders worry about money at least monthly, around 32% of Gen Z worry about their finances daily and 76% worry about money monthly,” Hope says.

This finding corresponds with recent data from the Helen Clark Foundation showing that 40% of New Zealanders under the age of 30 sometimes go without meals because they cannot afford food.

The confidence paradox

The report shows that these issues aren’t emerging because of a lack of financial capability. On paper, New Zealanders feel more capable and financially literate than they have in the past.

Kirk Hope says Kiwis are becoming more confident in financial decisions, but money remains tight.

However, their actual capacity to weather economic shocks remains incredibly fragile, leaving them vulnerable to job losses, medical emergencies or global volatility.

Basically, anything that could disrupt our salaries has the potential to disrupt our short-term financial well-being.

“People's understanding of basic finance is changing, and it's improving, but it's not translating into resilience yet,” says Hope.

“Inflation, for instance, is causing a big concern. That tells you Kiwis understand what’s causing their pain, but they’re finding it hard to challenge that.”

And this lack of resilience has major repercussions for our mental – and even physical – health.

This is again borne out by the data, showing that almost six in ten New Zealanders feel that financial stress impacts their overall wellbeing.

The good news is that we are getting better at building resilience over the longer term. Thanks to initiatives like KiwiSaver, more New Zealanders now feel that they’re on the right track when it comes to retirement. That money, however, is tied up, illiquid and offers little help in the face of a small crisis that needs immediate cash flow.

The thing is that our long-term resilience often becomes more challenging if we don’t have short-term resilience also built into our finances.

One key way we can do that is by ensuring that we have a larger emergency fund – but this is easier said than done.

How to build an emergency fund

Financial adviser Katie Wesney, the national coaching lead at Enable Me, says the goal for a solid emergency fund is usually three to six months of expenditure.

“But if money is tight, that can feel impossible,” she says. “So, I tell clients to aim for one month of essential costs first.”

This includes accommodation, food, power and transportation.

Katie Wesney says that automating savings is a good way to build up an emergency fund.

“It's the difference between a car repair being stressful versus a disaster,” she says.

Wesney says the best way to go about building this is to make the process automatic by transferring an amount you can afford into a separate account the moment your pay lands.

Even something as little as $20 means saving happens before life finds a creative way to spend it for you.

“If someone is genuinely maxed out on cutting and there's nothing left, ‘stay tight and hope’ isn't a strategy,” warns Wesney.

“That’s when it becomes important to look at the bigger levers. That could be a period of extra hours, upskilling, a side income, or, for some people, a temporary move like staying with family or friends for six months to reset.”

None of these measures has to be permanent, says Wesney, explaining that this is about creating a buffer that you’re comfortable with.

Short-term resiliency is built by recognising what you need to survive for an extended period and then taking the necessary steps to get there. None of this is necessarily easy, but it can be the difference between a crisis that derails your financial plans and one that you simply weather.

So how is your emergency fund looking? And do you have any helpful tips to help grow a decent fund to cover those unforeseen circumstances? Let us know in the comments section. If you’re using the Stuff app on iOS you’ll need to view Stuff.co.nz on a browser to view and post comments.