A new report from New Zealand’s financial mentoring sector is calling for immediate government intervention as household debt continues to spiral, leaving thousands of whānau struggling to meet the cost of everyday living.
The latest FinCap Voices Report reveals demand for financial mentoring has reached record levels, with more than 30,000 cases recorded over the past year. The report also shows the total debt carried by people seeking help has more than doubled over the past five years, approaching $1 billion, highlighting the growing financial pressures facing households across Aotearoa.
According to the report, many families are now spending more than they earn each week, forcing difficult decisions between paying for essentials such as housing, food and electricity, or meeting debt repayments. Financial mentors say they are increasingly supporting people who have exhausted their savings and are struggling to stay afloat amid persistent cost-of-living pressures.
FinCap says the demand for financial mentoring has surged by 57 percent since 2021, but government funding for the sector has remained largely unchanged. The organisation is now calling for an additional $30.5 million a year in sustainable funding to ensure mentoring services can continue meeting demand. The proposal includes increased government investment alongside contributions from banks, KiwiSaver providers, lenders, electricity retailers and telecommunications companies.
The report also raises concerns about debt collection practices. Financial mentors report that many clients are being pressured into repayment arrangements that leave them unable to afford life’s basic necessities. FinCap is urging the Government to introduce a licensing regime for debt collectors to strengthen consumer protections and improve oversight of the industry.
Another emerging issue identified in the report is the sharp increase in KiwiSaver hardship withdrawals, with financial mentors now spending a significant portion of their time helping people determine whether accessing their retirement savings is the only remaining option to cover essential living costs. The trend reflects the growing number of households facing severe financial hardship.
The report comes as broader economic conditions continue to place pressure on household budgets. Inflation remains elevated, interest rates have begun rising again, and higher living costs continue to weigh on families, particularly those on low and fixed incomes. Economists warn that while parts of the economy are recovering, many households have yet to feel the benefits.
FinCap argues that investing in financial mentoring is not only about helping individuals manage debt but also about preventing long-term social and economic harm. It says stronger support services and better regulation could help thousands of whānau regain financial stability while reducing future costs to the wider community.
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