Does your family have an eye on something big in 2017? An overseas holiday, or a new car maybe? Well you might have to do some pretty serious examination of your household’s spending habits, because according to new research from ME Australian households didn’t do too well at the whole budgeting thing in 2016. Here’s what the research discovered.
Our ineffective saving habits
ME found that of all the households surveyed:
While they look relatively harmless as individual habits, the four often end up being packaged together, and according to ME Head of Deposits and Transactional Banking Nic Emery, that’s what can seriously hold a household back.
“The key to getting ahead is tracking the real costs of your household expenses, setting a realistic budget, and committing to every single detail consistently.”
For those who have trouble with enacting smart saving strategies, Emery recommends making use of processes such as automatic transfers that “help you set, forget, and save”.
However, we’re not so good at that either according to ME’s research, which found that only 21% of households made use of automated transfers to build their savings.
Our savings habits were more along the lines of:
- Transferring money to a savings account when spare funds are present. (52%)
- Put money into a savings account and then transfer it to an everyday account when needed. (19%)
- Keep savings in accounts they can’t withdraw from, such as term deposits. (17%)
- Accumulate funds in an everyday account. (15%)
- Add funds to a home loan offset account. (11%)
What are our financial goals for the coming year?
According to ME’s research, the most common household financial priority going into 2017 is “saving for a holiday, car, or other expense other than a home”, followed closely by “paying off a mortgage”, and “building up ‘rainy day’ savings”. “Buying an investment property” and “investing or trading in shares, bonds, commodities, etc.” were the least nominated household goals.
Here’s the full list of the top 10 financial goals for Australian households in 2017:
- Saving for a holiday, car, or other expense other than a home – 26%
- Paying off a mortgage – 25%
- Building up ‘rainy day’ savings – 25%
- Paying off debts as fast as you can – 24%
- Building wealth for retirement – 18%
- Setting up a budget or a savings plane – 17%
- Getting debts under control and manageable – 15%
- Saving enough to buy a property to live in – 11%
- Buying an investment property – 9%
- Investing or trading in shares, bonds, commodities, etc. – 9%
How to avoid impulse buys
ME’s research also warns against what they describe as “YOLO purchases”, which are essentially just impulse purchases. Apparently close to half (45%) of us make them on a regular basis, and 52% of those who do say they spent upwards of $300 on their most recent impulse buy. That’s not an insignificant figure, and it’s money that would definitely be better off in a savings account.
So how do we avoid impulse buys that we’re likely to regret? Here’s a few of our best tips on resisting the urge to spend, and here’s an entire article concerning impulse buys and buyer’s remorse.
- Create a 10-day rule – If you see something you desperately want to buy, wait 10 days and then revisit the same item. If you still want it, then feel free to buy it, but you may discover that you no longer want it quite so badly.
- Don’t shop while upset – If something has recently put you in a foul or sad mood, you may be tempted to shop your emotions away, but trust us, it never works. Try finding alternative ways to deal with your feelings that don’t require money. A hot chocolate at home or a walk around the block can have a similar mood-lightening effect.
- Set a budget – If you have both a strict and well-defined budget (and the willpower to stick to it), then impulse purchases should well and truly be a thing of the past for you!
- Shop at places with good return policies – This is less about preventing purchases and more about ensuring that you can rectify the financial damage caused by an impulse buy. Only shop at places that will offer you a complete refund for a change of mind, so if you do end up regretting the purchase, you can get your money back and reset your finances to a pre-purchase point.
- Be selective about when and where you take your credit card – Having a credit card in your wallet can lead to a more relaxed attitude about spending, which can in turn lead to impulse buys. Try leaving the plastic at home more often.
Best of luck to you and your household, and a happy (and hopefully financially prudent) 2017!