The results released this week show 46 per cent of New Zealanders are not saving - in stark contrast to Australia where a similar survey highlighted just nine per cent are not saving.
The discussion document "Savings in New Zealand - Issues and Options", recently released by Treasury, also highlighted New Zealand's low savings level compared to most other countries in the OECD (Organisation for Economic Co-operation and Development).
In addition, billions of dollars are sitting in transaction accounts each month, which typically give no or low interest on your money, says Mike Heath, the General Manager of RaboDirect, New Zealand's only specialist online savings and investments bank.
"According to Reserve Bank figures, there is more than 27 billion dollars of retail funding in these transaction accounts. Our research shows more than 50 per cent of New Zealanders leave more money in their transaction accounts each month than is necessary to cover expenses. These people are potentially missing out on interest that is available to them," he says.
"One very simple way to increase your savings and maximise returns is to make sure you put any extra money left in your transaction account each month into a higher interest savings account. For example, if those 27 billion dollars were deposited in an on-call account earning four per cent interest, that's one billion dollars worth of interest for the taking."
Over the past four years RaboDirect has been tracking New Zealanders' savings and investment priorities. "We've monitored the factors people consider when choosing where to put their money. The financially turbulent times have had a major impact on those choices," says Mike Heath.
The first survey in 2007, conducted just before the collapse of a major New Zealand finance company, showed high interest was the number one priority for most people (72per cent), with just 30 per cent considering security when investing.
However, the 2010 survey shows a complete reversal, with security of money the first priority (73 per cent) and high interest rate second (52 per cent). Fees and charges ranked third (47 per cent), followed by access to money (46 per cent) and the reputation of the financial institution (39 per cent).
"Given the events of the past four years, it's good to see that security of money has become the key focus for New Zealanders," Mr Heath says. "Interestingly, the government's retail deposit guarantee ranked eighth out of 12 factors in the survey, and an institution's credit rating ranks even lower on the list," he says.
The RaboDirect survey also looked at where people are choosing to put their money when they save or invest. A personal savings account is by far the most popular option at 79 per cent, while nearly 20 per cent have term deposits. Other investment channels were bonds (8 per cent), shares (7 per cent) and property (7per cent).
Mr Heath says a similar survey was conducted by RaboDirect in Australia earlier this year, which showed people in New Zealand and Australia were saving for similar reasons. "However, the number of people saving is dramatically different between the two countries," he says.
"More than 20 per cent of New Zealanders are putting money aside for a holiday, closely followed by 17 per cent saving for a "rainy day" or emergencies. Across the Tasman, holidays and emergencies are also top of their priority list, but the amount of people saving is significantly higher at 35 and 22 per cent, respectively.
"This is not surprising given that our survey found 46 per cent of New Zealanders are not currently saving. People are paying off debt, spending, or they simply don't have any money left over at the end of the month - this is true for 30 per cent of New Zealanders."