Some households with incomes over $150,000 claim that their income is too low to meet their daily needs, or just enough to make ends meet.
Well-being statistics released by Stats NZ Tatauranga Aotearoa show that many of the lowest-income households with incomes of $30,000 or less do not have enough money to meet their daily needs.
But the well-being statistics also reveal a surprising number of people from higher-income households who said they were struggling financially in 2021.
People from about 5% of households with annual incomes of $150,000 or more claimed they didn’t have enough to live on, while about 10% said they had just enough money to get by.
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Financial advisor Hannah McQueen said, “If you’re making $150,000 and you can’t make ends meet, there’s a problem. It’s not an income problem. It’s a spending problem,”
But it wasn’t surprising because people with higher incomes often allowed themselves to spend, and that resulted in their spending creeping up, McQueen said.
“These people have enough money to remain inefficient,” she said.
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Reserve Bank Governor Adrian Orr discusses the risk of a recession in May.
“If you’re making $150,000 and you’re not making progress, you have to rethink everything.”
McQueen was more sympathetic to households in the $100,000 to $150,000 income bracket, who said they had just enough to meet their daily needs.
In a city like Auckland, McQueen estimated that $160,000 in household income was the level it needed to prosper.
The well-being statistics paint a national picture of well-being, including overall life satisfaction, which economists equate with happiness and income adequacy.
Ronji Tanielu, chief policy analyst at the Salvation Army, said there were households at the lower end of the household income scale that did not have enough money to participate fully in their communities.
“There is a level of income that is needed to support the basics of life in Aotearoa,” he said.
Tanielu said he had lived in many countries around the world, including countries with much lower family incomes than New Zealand, and warned higher-income households to remember how relatively happy they were.
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Ronji Tanielu, Salvation Army social policy analyst and parliamentary unit analyst, says there is an income level below which it is not possible to pay for basic necessities.
“In Western countries, we equate material possessions and money with bringing us happiness,” he said.
Dan Weijers, an associate professor at the University of Waikato Te Whare Wānanga o Waikato, is researching well-being and said there is a link between income and happiness, but it wasn’t easy.
“Income increases continue to make a difference to happiness, but they barely matter after a certain point,” he said.
“It is important for poor people. Their income goes up and their zest for life increases, but once they are about halfway through New Zealand society, the profits occasionally diminish,” said Weijers.
“If you end up making $70,000 or $150,000 it won’t make a huge difference, but if it’s between $30,000 and $70,000 it does make a big difference,” he said.
However, the relationship between income levels and everyday experiences of happiness and satisfaction with things like family relationships is different.
Well-being statistics show that people from middle- and low-income households rate their everyday experiences of family life and feelings of happiness at a comparable level to people from higher-income households.
Of incomes that cannot keep up with inflation and rising interest ratescan New Zealand expect an overall decline in life satisfaction in the next well-being survey?
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dr. Dan Weijers, senior lecturer at the University of Waikato, says that for middle-income and wealthier households, small swings in income result in only small increases and decreases in their happiness levels.
“Life satisfaction increases as the economy gets better, but when we have a failure, a downturn, we immediately lose all those gains that had been steadily building up,” he said.
That helped explain why the population reported no increases in happiness over time despite an increase in GDP, he said.
Other explanations included people’s tendency to measure themselves against others in their society, and also that, above a minimum income, increases or decreases did not greatly affect people’s personal happiness.
People’s education, their genetics and the intentional things they did, such as maintaining family relationships, were more important, Weijers said.