'A Nation Of Spenders': Australia's Poor Saving Habits Revealed

New research from UBank shows that Australians are withdrawing $31 billion from their savings each year, and 1 in 3 people are left penniless by payday.

Australian spending habits

According to UBank’s Science of Spending & Saving Experiment, these bad savings habits are putting many Australians at risk of poor long-term financial security.

The research found that 2 million Aussies have less than $1,000 set aside in savings, and 35% do not have a dedicated savings account.

Shockingly, the results also show that over half (57%) of us rely on our savings for the odd bill or special purchase, amounting to $2.6 billion being drawn from Australian bank balances each month.

Poor planning could be a reason, with over 60% of Aussies saying they have no savings plan, while 46% are living without a weekly budget.

It was also found that around 1 in 3 (35%) people are living paycheck to paycheck.

Most Aussies spending money on things that make them happy

UBank’s research shows most consumers tend to prioritise short-term gains over long-term saving goals.

The research indicates that 45% of Australians in the survey confirmed that more often than not, their money is being spent on items or experiences that make them happy.

“So while almost one quarter (22%) of Australians are actively trying to save, the pursuit of immediate reward is proving a frequent distraction,” reports UBank.

UBank says this is creating a bad habit where as soon as money comes in, it’s already on its way out.

UBank to help consumers with bad spending habits

After conducting some research into these bad spending habits – in partnership with an expert in consumer neuroscience at the University of Melbourne – UBank is launching a new technology to help people manage their finances.

“Using artificial intelligence (AI), we will create an experience within our internet banking platform to help customers plan for ‘regular’ expenses such as monthly phone bills and also ‘irregular’ costs like car insurance, which need to be paid less frequently,” said UBank CEO Lee Hatton.

“With money set aside for these kinds of expenses, customers can then manage their daily spending allowance and savings plan more effectively, similar to the way fitness apps support wellbeing.”

This technology is expected to arrive for UBank customers in late 2017.

4 tips to spend smarter

In the meantime, UBank has developed the following tips on the ways to best train your brain into smarter spending and saving.

1.      Physically visualise your savings goals

Research by UBank and Dr Phil Harris from the University of Melbourne found that there is a 72% chance that people would make smarter savings decisions after visualising themselves later in life.

UBank recommends applying this same logic of looking to the future when it comes to making big purchases.

“This can be as simple as printing a picture and sticking it on your desk or fridge, or using it as your phone’s lock screen,” they said.

“Whether it’s a new car, a holiday or your dream home, seeing the visual regularly can help you achieve your goal.”

2.      Make saving a habit rather than a chore

With more than 2 million Aussies having little to no savings, UBank says it’s time we make saving a regular habit rather than a chore.

According to UBank, it takes the average person 66 days to turn a new behaviour into a habit, so they recommend starting small at first.

“This might mean putting $2 a day into your savings account for the first week, then doubling it every week until you reach your weekly savings goal,” said UBank.

3.      Go ‘old school’ with cash

While we use cash less and less now that there are options like contactless payments, UBank says using cash can actually be a useful tool to save money.

“Psychologically, it’s easier to spend money that’s on a credit card, as you don’t see the money leaving your hands,” said UBank.

They recommend simply withdrawing cash for your spending, as you will feel “less inclined” to hand over that hard-earned money.

4.      Write down and share what you’re spending

According to UBank, the latest research shows that our social connections powerfully shape the value we assign to our spending.

They therefore say it’s a good idea to share your spending habits with a friend or family.

“Impulse spending relies heavily on emotions and if you’re forced to track all your spending habits and share them, the thought of this can take the joy away from the purchase,” said UBank.

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