OPINION: The Government said it would be no lolly scramble and they weren't kidding. With another treat-free year on the horizon, Frances Cook shares tips on how to best prepare.
I keep hearing that we need to save for a rainy day, then looking around me and seeing a lot of people already standing in the rain. At this point, I just want them to start handing out the umbrellas. Because we’ve all been getting damper for quite a while.
Nicola Willis challenged on no cost-of-living relief in Budget 2026 – Watch on TVNZ+.
Remember “survive to ‘25”? The unofficial slogan of 2024, where the business community at large hopefully told each other that they just had to get through that one year, and it would be better after.
Then it became obvious 2025 wasn’t much better, and the quip changed to “we’ll get a fix in ’26!”
Erm.
We’ve been told over and over that things will get better “soon”, and like chasing the end of a rainbow, that “soon” just keeps getting further away.
Budget 2026 landed a couple of ago, and if you were expecting some cost-of-living relief, something concrete, something you'd actually feel, I think we can agree that it wasn't there.
To be fair, they warned us. No lolly scramble, even in an election year. They weren’t kidding.
Warnings to heed
There was though, in the economist predictions that accompanied it, some warnings that you shouldn’t be holding out for things to get much better soon. Treasury's numbers paint a bit of a grim picture on the year ahead.
Inflation is likely to go up from 2.7% last year, to 4% this year. A huge chunk of that is fuel prices, courtesy of the war in the Middle East that has choked global supply.
The rest is the economy doing what economies do when costs are high and growth is slow.
There was, at least, an acknowledgement that that situation could keep dragging on, and the Government should plan accordingly.
There’s now an emergency fund of $450 million set aside to protect government agencies and essential services if the fuel crisis gets worse, itself an acknowledgement that that is increasingly likely.
Unemployment predicted to peak at 5.5% this year before gradually easing.
The problem is that a lot of this grim-but-it-could-be-worse analysis is based on Treasury’s rather rosy assumption that the fuel crisis will be short-lived, and the conflict in Iran is resolved.
Given how unpredictable Trump has been on this so far, that may be an optimistic basis for these forecasts.
So, it’s getting better soon, hey? I feel like we’ve been here before. The finish line has moved again, we’re all tired, and the government has made it clear there’s no umbrellas in the hallway closet to be handed out.
So if there’s no cost-of-living measures coming, it’s up to us to take shelter from the rain, and not just hope that it’s a sun-shower.
So. What do you actually do with all of this? We take note of the hope fatigue we’re all feeling, and give it a smack on the head.
Because when we’re tired and anxious, there’s a real risk of throwing our toys, and making a bad money move. Sell the investments. Raid the KiwiSaver. Do something, anything, to feel less out of control. And that impulse, while completely understandable, can end up hurting your financial future just as much as the rest of what’s going on.
So how can we take some power back, and control the things we can control, now that we’ve got the official “you’re on your own, kid”?
Well, based on the new predictions of where the country is heading, here’s where I’d focus.
If you have a mortgage
The Budget boffins are letting us know the time of falling interest rates are done for now.
Treasury’s new house price prediction is partly built on that. Back in December they said house prices would probably go up 6-7% over the next year, now they’re predicting a much humbler 3-4%.
And with inflation heading up, so will interest rates.
So if you’re coming up to a mortgage refix, and were hoping to hold out for one more drop… I wouldn’t hold your breath.
It’s worth making an appointment with your bank or mortgage adviser, now-ish.
Brace for more fuel pain
At the very least, higher fuel costs don’t seem to be going anywhere fast, and they might actually get worse.
The Government finally biting the bullet to put in place a $450 million contingency fund tells you everything you need to know about their confidence that this resolves quickly.
Build higher fuel costs into your actual budget now, as a line item, not as a temporary annoyance you'll adjust for later. Because later might be a while.
Protect your job
If unemployment does as predicted, and peaks at 5.5% this year, that means an already tough job market is getting worse before it gets better.
Stories are everywhere of people who’ve been looking for work for months, and getting no bites.
So a solid strategy is making sure you’re putting in extra effort when you clock in, and doing some personal financial prep, just in case the worst happens.
No need to catastrophise, but do think about building up some emergency savings, and stay across what’s happening in your industry.
If you find an opportunity to upskill or make yourself extra useful to the boss, it’s probably a good idea to take it.
For investments and KiwiSaver
Don’t let anxiety push you into action for action’s sake.
Most of the worst investing decisions happen when people let the headlines push them into reactive mode, and they feel like any action is better than doing nothing.
Doing nothing can be the hardest strategy of all, but it’s often the best call at times like this.
Get financial foundations sorted
Avoiding debt, building up savings, and staying calm, are the strategies that none of us want to hear but all of us need to do more of.
It’s a bit like the “get more sleep, drink more water, take a walk” health advice. It’s annoying, feels too simple to work, but often has a bigger impact than other, more complicated strategies.
And certainly, making sure the basics are locked down, are one of the few things we can be doing when it’s been pointed out the storm is going to continue for a bit longer, no government-supplied umbrellas in sight.
Plan accordingly.
Adios 'survive to 2025', let’s nix the 'fix for 2026'.
Maybe just a little 'pray to heaven for 2027' – but then I’m going to just focus on controlling the things that I can. Because Government-sponsored rescue is clearly off the table.
The information in this article is general in nature and should not be read as personal financial advice.
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