25 September 2012

Budgeting services feeling the squeeze

The impacts of the economic recession are not over, according to the New Zealand Federation of Family Budgeting Services. “We have seen our biggest ever increase in client numbers,” said CEO Raewyn Fox. “Two years ago we were seeing around 31,500 client cases a year. This year we saw over 55,000 client cases. This is a massive increase and reflects the dire state in which some families are finding themselves.”

Budgeting advice is offered free throughout New Zealand through a variety of community organisations. More than 850 budget advisers, 58% of whom are volunteers, offered 460,000 hours of budgeting advice in the previous year.

“The hours we’re working has dramatically increased,” said Fox, “due to the increased complexities of the client cases we’re seeing. Where previously a typical client had a couple of debts, now they have several. We’ve had continued demand for assistance with insolvency procedures, something that first became noticeable in the 2007-08 year, the same year the global financial crisis began.”

When asked to speculate on the reasons for the increase in client numbers, Fox points to three possible causes. “The economic recession has meant more people than normal are finding themselves made redundant, or their working hours reduced. When you haven’t got savings to fall back on, this can be extremely hard to cope with.”

“The second cause is Work and Income. The implementation of the Future Focus legislation has meant far more referrals to budgeting services. We’re working with Work and Income to address this as soon as possible.”

“The third cause is actually a great positive. Our typical client two years ago came to us with $32,000 in debt. This year our typical client presents with only $20,000 in debt. This is a great indication that clients are beginning to seek help earlier. We’re really encouraged by that,” Fox said.

“We’re also encouraged by the excellent work our budget advisers are doing with their clients. Most ongoing client cases are completed within six months, and in that time they have helped their clients retire an average $1,300 of the client’s overdue debt. Since many of our clients have low incomes this is a great achievement, and represents $28.9 million of overdue debt being retired.”

“However there is no doubt that our capacity to deal with our client numbers is extremely stretched. We have more budget advisers, working more hours, across more budgeting services – and still our budgeting services are swamped. Budgeting services are feeling a similar squeeze to many of their clients, Fox said. “It’s really a good chance to practice what we preach. When our funding does not cover our client case load, we need to find ways around this, and look for alternatives. The principles of reducing expenses and increasing income apply to our clients as well as our budgeting services.”

Yet as the impacts of the economic recession continue to be felt across New Zealand, Fox has a message for all those experiencing difficulty with their household finances: “It’s never too early to see a budget adviser.”

ENDS

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