Culture of saving needed to prevent harm of bad debt

Culture of saving needed to prevent harm of bad debt

Money needs to be talked about openly to help people prepare for financial emergencies, and prevent the suffering caused by high-interest debt, says the Minister for Pacific Peoples’, Mr Aupito William Sio.

Speaking at an event at Mangere Markets on Saturday, September 1, to preview the start of Money Week, Mr Sio, who is also MP for Mangere, said he saw first hand the harm done to families and communities by “loan sharks” that offer quick access to high-interest debt.

“If families had an emergency savings account they wouldn’t be vulnerable to those organisations,” said Mr Sio. “We need to have open conversations about money to restart a culture of saving, and pass that on to our children.”

Mr Sio helped the Commission of Financial Capability (CFFC) invite market-goers to open fortune cookies containing a variety of ‘financial misfortune’ scenarios, and talk about whether they were prepared to cope if that event happened to them. Mr Sio was pleased to hear one woman say she had insurance if her car damaged someone else’s property; others were not sure what they would do if a pet faced a $2000 vet bill.

Sorted Money Week is an annual public awareness campaign run by the CFFC, aimed at helping New Zealanders sort their personal finances. The theme of this year’s Money Week, to run from September 3-9, is ‘Weather Life’s Storms’, encouraging Kiwis to think about three areas that will help them and their families cope with unexpected costs – building an emergency savings account, gaining insurance cover for losses they couldn’t easily absorb, and making sure they have a will to protect their loved ones.

The Head of Community Programmes for the CFFC, Mr Peter Cordtz, said the CFFC knew from its work with community partners that for people to achieve their long term financial goals, such as home ownership or a comfortable retirement, one of the critical things they needed was a buffer to help them deal with unexpected emergencies that might otherwise lead to high cost debt.

“This isn’t just about saving, it’s also about ensuring they’re properly insured. It’s not a question of whether you can afford it, it’s about understanding what’s at risk if you don’t have a buffer or adequate coverage,” said Mr Cordtz.

Mr Sio acknowledged his colleague Mr Kris Faafoi, the Minister for Commerce and Consumer Affairs, for working to crack down on loan sharks and help communities face the problem of high interest debt.

“A first step is for families to start talking openly about money, have an honest discussion about how they would deal with a financial crisis. Building our financial capability will help our families, our communities and our country, so we as a nation can deliver the services our people need.”

For guidance on saving, insurance and wills, visit sorted.org.nz

For more info on Money Week, visit moneyweek.org.nz

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