The cost of living - and rising grocery bills in particular - is proving a big barrier to New Zealanders saving, according to a new report from Kiwibank.The Kiwibank State of Savings Index, now in its third year, does a deep dive into New Zealanders' saving habits.The nationwide survey was carried out by Talbot Mills Research.It shows that while saving remains challenging, New Zealanders' budgeting and saving habits are holding steady.This year's report found 44 percent of Kiwis regularly saved, compared with 43 percent last year.Kiwibank chief executive Steve Jurkovich said the research showed that despite ongoing financial pressure, Kiwis continued to budget, save and find ways to make progress, from cutting spending to using new savings tools.However, of those not saving, 61 percent said they could not save because they were prioritising surviving and could not make ends meet, while of those who reported saving challenges, 74 percent cited the cost of living as their biggest savings barrier.Forty-one percent said they had taken on debt to cover increased living costs, with 19 percent turning to Buy Now, Pay Later schemes and 12 percent getting loans from family and friends."We are seeing a definite trend of people finding that they are having to turn to and use Buy Now, Pay Later in situations like supermarkets and other places where we probably didn't historically think that Buy Now, Pay Later would be showing up," Jurkovich said.When it comes to financial emergencies, 28 percent of Kiwis said they would not have enough in their accounts to cover an unexpected bill of $500 without borrowing it, selling something, or putting it on a credit card.The report found some groups faced greater pressures around savings than others.For example, younger New Zealanders and renters were far more likely to have taken on debt to cover the cost of living, while Māori and Pacific peoples were significantly more likely to have taken on debt than NZ Europeans.Kiwibank chief executive Steve Jurkovich.SuppliedBudgetingThe State of Savings report found 59 percent of Kiwis reported having a household budget, with 85 percent saying they broadly stick to it, up 1 percent from last year.Thirty-nine percent made deliberate changes to improve savings, such as reducing discretionary spending, changing grocery shopping habits and cancelling subscriptions.Steve Jurkovich said it showed the importance of building saving habits if people were able."It does really show, if you can just get started on that habit, that the habit sticks, and I 100 percent understand there are a bunch of people who wish they were in that position."It also found that Kiwis were starting to turn to new tools to help with their budgeting and saving.Twelve percent of those surveyed said they used AI for budgeting and savings advice, with 64 percent saying they thought it was helpful.When it comes to savings products, only 54 percent said they were aware that savings accounts often require specific conditions to be met for customers to earn the headline interest rate.The emergence of open banking was also starting to play a role in saving habits.Open banking allows people to share their bank data with standalone financial apps and technology that can then make payments on their behalf.Fifty-two percent of Kiwis said they had some understanding of open banking.