Households are struggling to save or cope with an unexpected bill because of the high cost of living, according to a Kiwibank report.

The bank's first State of Savings index showed 59 per cent of respondents have a budget, and 41 per cent have regular savings, but 30 per cent would struggle to pay an unexpected $500 expense without having to borrow, sell something, or resort to a credit card.

Kiwibank chief executive Steve Jurkovich says the survey points to financial resilience, but also vulnerabilities.

"While it's encouraging to see that some New Zealanders are managing to save and set financial goals, the research shows that a large portion are vulnerable to financial shocks."

He says households understand the need for budgeting and saving, although the amount being saved monthly, outside of Kiwisaver, is generally less than $100 for four out of 10 respondents.

'Confronting' data

Steve says the tight financial position of many households is reflected among Kiwibank customers.

"People are now six times more likely to tell you the big financial issues they are facing are the cost of living versus divorce, illness or losing a job, and we have certainly noticed that over the last 18 months.

"We've also noticed in our card spending that spending on entertainment, hospitality and retail are down very sharply, so real indicators show people are knuckling down and paying the bills they have to face such as the mortgage."

The survey shows about two-thirds of those with mortgages are likely to follow a budget, as are those aged between 30 and 44.

Regular savers' priorities are for emergencies, holidays, and retirement, with women more likely to save for emergencies and those under 30 more likely to save for home ownership and a car.

However, women and those under 30 are also more likely to be struggling to save, which nearly three quarters of respondents put down to the high cost of living.

Steve says the data regarding women is "confronting" and points to the need for measures giving them support at times when they are taking time out for parenting or caring for elderly.

He says tough financial conditions are set to remain for the rest of the year, but interest rate cuts by the Reserve Bank will at least lift confidence, even if they provide little immediate relief to households.

The survey of 1046 people was conducted by Talbot Mills the week before the budget with a margin of error of +/- 3.1 per cent.

-RNZ.