New research commissioned by the New Zealand Financial Services Council (NZFSC) has revealed many New Zealanders are taking a high-stakes gamble on managing risk.
The research entitled ‘Risking Everything’ had been carried out by Horizon Research and looked at New Zealanders attitudes to financial risk and how they protect their wealth should the worst happen.
Richard Klipin, chief executive of the NZFSC, said the research found although New Zealanders were aware of their financial risks most weren’t doing much about it.
“The majority of New Zealanders have not considered the risk of ‘protecting me’, with just 20 per cent of respondents saying they had considered a risk of lost income due to illness or serious injury,” Klipin said.
“Over 50 per cent of Kiwis said that they disliked having to think about impact of financial risk, and when they do think about it, almost half (43 per cent) then forget about it.”
“The research indicates that a stigma still remains in New Zealand around discussing, managing and engaging with financial risk.”
Adding to the high-stakes gamble, the research also found two thirds of New Zealanders did not have enough savings to cover an unexpected short-term loss of income.
“Of those surveyed, only 37 per cent thought that they had sufficient savings to cover household expenses such as rent or mortgage repayments for a three-month period,” Klipin said.
“Nearly two-thirds of those surveyed had checked car and home contents insurance in the past few years, yet only 20 per cent had considered the financial implications for other members of their family if they died.”
The NZFSC put together five rules of thumb to help New Zealanders better manage risk:
- Take some time to identify how much money you might need to cover you and your family should the worst happen;
- Understand how much risk you are willing to take, and protect yourself for the rest;
- Aim to save enough to cover three months’ pay or income;
- Life changes, so review your cover and risk regularly to make sure you are remain adequately covered;
- If in doubt, ask questions and seek advice from an adviser or your provider.