How many financial crises can you expect in your life?

Sunday, 12 April 2026

Senior business reporter Rob Stock answers your money questions. Got a question for Sunday magazine? Email it to sundaymagazine@stuff.co.nz

QUESTION: I can’t seem to remember a time in the last 10 years when there wasn’t a sense of financial crisis? I don’t remember it being so consistently bad for so long. Am I wrong?

ANSWER: Yes, but you have to be “of an age”.

A few years ago I got interested in the so-called Misery Index, which is the sum total of inflation plus unemployment. It was a originally called the Economic Discomfort Index, and it was popularised by US Presidential hopeful Ronald Reagan has he fought to unseat Jimmy Carter in 1980.

The idea of the Misery Index was to provide a single number by which to understand the economic fortunes of the public. New Zealand’s misery index shows that the 1990s were tough.

We are in the midst of what may one day be known as the Trump Crisis. Depending on what happens next, the misery index looks set to climb over 10%.

Inflation and unemployment are rising, and ANZ economists have inflation peaking at 5.7% and unemployment at 5.6%.

Peak misery index levels of 10% or more were hit in 1990, 1991, 1992, 1993, 1994, 1995, 2010, 2011, 2022, and 2023.

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The Trump Crisis was unpredictable in one sense.

Had you asked me at the start of the year whether the US would attack Iran and create a global oil crisis, I’d have rated the chances as being relatively low.

In another sense, financial crises are so common, they are an ordinary feature of life, and we in our South Pacific refuge have to accept that, and run our money lives accordingly.

The misery index numbers indicate really tough times were experienced in 10 of the last 35 years.

Over the last 120 years, the stock market has experienced a significant “crash” or bear market roughly once every 4.5 to 5 years on average.

Remember, stock markets often provide an imperfect, distorted mirror to the state of the wider global economy.

These crashes anjd crises have been associated with all manner of causes: pandemics and the reactions to them, excessive credit and financial engineering, laissez-faire deregulation and economics, wars, oil supply disruptions, political insanity, and human tendencies to create mad investment bubbles.

The takeaways from this are clear.

You can expect to live through multiple financial crises in your life. Don’t let that panic you. Generations before lived through multiple crises and lived decent, meaningful lives.

Use the calm water between turbulence to make progress, and build your financial resilience (build and maintain marketable skills, amass emergency savings, pay down the mortgage, etc). Do not take on debt lightly, especially debt for nice-to-haves like cars, consumer goods and holidays. The advice most commonly given to people on investing is to have a long term plan, and stick to it.

Avoid panic selling in a financial crisis as markets are falling. Keep drip-feeding your money into your investments at a rate projected to get you what you need to live on later in life.

In every budget there are things that can be cut and trimmed, sometimes to the bone at grim necessity. It’s not fun, but lifestyles can be pared back. Just look at the drop in car use as the petrol price has risen. Even people who can manage to pay $3.40 a litre are driving less in pro-social solidarity.

Tragically, in our user-pays world that for those doing it hardest, that can mean healthy food and healthcare.

For most though, it is just a period of tighter belts and heightened anxiety. Not good. But that, it seems, is a part of the human experience.