Forget a digital detox or a diet in the New Year — with a recession looming Northlanders may have to commit to a financial detox instead.

That’s the advice from economists and budget advisers with
predictions of an economic slowdown in 2023 driven by rising interest rates.

Low income earners are likely to be the worst affected along with anyone who’s bought a house in the past two years and is now facing a jump in mortgage repayments.

Whangārei’s Brad Olsen, principal economist at Infometrics, said it was a good time for Northlanders to reconsider their financial priorities and plan for the twin scourges of rising unemployment and ongoing inflation.

“Given that it’s now well-signalled that the economic environment in 2023 will be more challenging, it would be prudent for households to think about how they respond to those challenges before they hit.”

That meant thinking about how they spent their money and balanced their budgets, while people with mortgages should talk to their mortgage adviser about likely future repayments.

“More generally over summer, this is probably a good time to do a bit of a financial detox and think to the year ahead … What are your priorities as a household, what do you need to make sure you still spend on, and what areas might you need to trim back — potentially quite substantially?

“For example, how many subscriptions do you have for services that maybe you don’t make full use of? Also, what other options or opportunities do you have if more challenging environments come? What happens if you lose your job, how well-prepared are you?”

Olsen said inflation was likely to peak at 7.5 per cent and unemployment was expected to rise from around the current low of 3.3 per cent to 5.5 per cent or higher.

Consumers had already been hit by rising prices with inflation at 7.2 per cent in the September quarter.

Infometrics data showed the cost of groceries supplied to the Foodstuffs supermarket chain rose by 10.2 per cent in the year to November, an increase that will likely be passed on to consumers.

Consumer’s money-saving tips for 2023

With Northland households likely to feel the pinch in 2023, Consumer NZ has compiled a list of (mostly) painless ways to save an average household up to $1200 a year.

Head of campaigns Gemma Rasmussen said the simplest way to save money was to check you were on the right power plan.

The average saving netted by people who changed to a different power company or plan after using the online tool Powerswitch.org.nz was $385 a year.

There was no paperwork involved and electricity would not be disconnected.

“It couldn’t be simpler to switch power plans or providers,” she said.

Determined savers could gain even more by moving to a time-conditional power plan, then shifting power-hungry activities to off-peak periods.

Households that could “load-shift” typically shaved another 10 to 20 per cent off their power bills, or up to $440 a year for an average household.

Other ways of cutting power costs included washing in cold water, drying laundry outside, switching to LED bulbs (and buying them at hardware stores where they were cheaper), changing to an energy-efficient shower head, and boiling only the amount of water needed when making a cuppa.

Shop smarter

Consumer’s other tips involve buying smarter rather than cutting back — and being wary of “buy now pay later” schemes that can cost more in the long run.

Rasmussen said a lack of competition in New Zealand’s supermarket sector meant shoppers missed out on sharp pricing.

One remedy was to keep an eye on the Grocer.nz app to compare prices of the same products at different supermarkets. It was also worth remembering there was little reward in being loyal to one supermarket chain, she said.

Gaspy, a crowd-fed app which allowed motorists to easily compare fuel prices, and PriceSpy could also save Kiwis hundreds of dollars a year.

PriceSpy allowed shoppers to not just find out where a product was cheapest but also to work out if a sale was genuine.

Rasmussen said people should also check their insurance policies, mobile phone plans and subscription services. Home insurance policies especially could vary hugely in price for the same cover.

One area where New Zealanders spent more than they should at this time of year was credit cards and “buy now pay later” (BNPL) services.

She advised credit card users to pay off as much debt as they could, rather than making the minimum payment, to avoid high interest charges.

While BNPL schemes were interest-free, that could be more than negated by hefty late payment fees.

Rasmussen advised anyone struggling with credit card or BNPL debt to contact any of Northland’s budget advice services.

“Taking a bit of time to use tools like Powerswitch, Grocer, PriceSpy and Gaspy, as well as being deliberate about how, when and where you spend could net you well over $1200 in 2023.”

Tips for a (financially) healthy 2023

Dianne Harris, a financial mentor co-ordinator at Whangārei Anglican Care Centre, has offered these tips for getting the year off to a financially healthy start: