These are the financial habits you need to kick in the new year to get ahead
Many of us roll into the new year with bad financial habits. These are some that you can kick to help you get on top of your finances in 2020.
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As we sign off for another year and enter the new decade there’s no time like now to kick to the curb bad money habits.
Despite record-low interest rates – good news for borrowers but horror news for savers – many people haven’t had a payrise in years and they’ve been hit by rising costs of living.
New research by bank ME, which quizzed 1000 Australians this month, found 52 per cent of Australians said their income – or lack of – would be the biggest barrier to achieving financial goals in 2020.
And not far behind was the cost of living which 48 per cent of people said would also hold them back from getting ahead financially.
Other hurdles likely to stop people from achieving their financial goals included a lack of discipline (21 per cent), lack of financial knowledge (13 per cent), and having a bad attitude (5 per cent).
Here’s some money habits many Australians could try and kick in the new year to help get themselves in better financial shape.
1) MAXIMISING SALES
There’s no doubting it’s been a tough year for retailers and consequently many have been forced to have continuous sales to lure shoppers to spend up.
For organised consumers this has meant people could score big savings.
Signing up to your favourite retailers and being alerted of sales helps.
Stay-at-home mum Madie Hamilton, 31, from Sydney’s beachside suburb of Maroubra, has planned to curb her spending in 2020.
To do this she wants to become better at buying items at a discounted price.
“There’s sales on all the time and I often shop at factory outlets to save,” Mrs Hamilton said.
“There’s no reason to pay full price when items are always on sale.”
The post-Christmas sales are in full flight and will continue through into 2020, allowing shoppers to snap up decent discounts off full-priced goods.
2) REDUCING GROCERY COSTS
It’s the household expense no-one can avoid but there is money to be saved.
Latest statistics from Budget Direct showed the average household’s weekly spend on groceries was $255.
Ms Hamilton, who is on maternity leave, said in 2020 she hoped to “save more and spend less”.
This included sticking to planned trips to the supermarket and always having a shopping list in her hand.
“We plan ahead when we go grocery shopping so we have a list to check off, that way we can save money,” Mrs Hamilton said.
“Buying in bulk also helps especially with a baby.”
Going to the supermarket armed with a shopping list and without children in tow – if possible – could also help avoid pester power.
And avoid shopping while on an empty stomach – this could leave you buying more when you’re hungry as you likely to be licking your lips as you stroll through the aisles.
3) DITCHING CREDIT AND USING DEBIT
It’s becoming the new trend – more Australians are turning to paying with their own money instead of racking up debt.
Figures from the Australian Banking Association found during the past decade the amount spent on debit cards relative to credit cards during the festive season rose from 38 per cent to 50 per cent.
The ABA’s chief executive officer Anna Bligh said the results signalled Australians were becoming savvier.
“Debit is fast becoming the payment method of choice as banks offer more options than ever to use during the festive season with the number of transactions quadrupling over the last decade,” she said.
However the nation’s credit card bill has remained ginormous.
Latest Reserve Bank of Australia figures showed on personal credit cards Australians owed $43 billion and $27.5 billion was accruing interest.
Many credit cards attract rates above 20 per cent so if possible switch to using debit instead of credit and focus on wiping the slate clean on your credit card debt once and for all.
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4) RIDE SHARING
This is one of those incidental charges that does not seem like a lot but it all adds up.
Financial adviser Scott Haywood said Australians were “getting lazier” and lapping up ride-sharing services, with city people often doing away with using public transport and opting for rides from companies including Uber and Ola.
“Start 2020 with a healthy mindset not only towards Uber but towards having fresh air and getting out,” she said.
“Australians are getting lazier from ride sharing because it feels cheap and we are not yet feeling the pinch of a $7 fare.”
Mr Haywood said time constraints often resulted in people seeking out ride-sharing services, but with more organisation using public transport was a simple way to cut costs.
5) BUYING SECOND-HAND
Buying brand-new items comes at a cost but if you’re prepared to get an item that is as good as new then consider purchasing second-hand goods.
There’s plenty of sites were you could buy preloved things including Gumtree, eBay, Facebook Marketplace, buy, swap or sell sites or even local markets.
Mrs Hamilton said in the new year she would consider buying more items that were preloved. “I have wasted money in the past on things I don’t need, like everyone else I walk into Kmart with one thing I need and walk out with 10 things I really didn’t need,” she said.
“I’m going to look at buying more items that are preloved.”
6) STOPPING IMPULSE PURCHASES
Small purchases all add up.
Whether it’s coffees, a snack here and there or a bottle of soft drink, these are the expenses most of us don’t pay a lot of attention to.
MyState Bank’s general manager of digital and marketing Heather McGovern said, there’s “nothing wrong with dabbling in the occasional small impulse purchase every now and then” but could easily fester into a bigger problem.
“If the small purchases are becoming a habit, it could be a huge drain on your savings,” she said.
“New functionalities like buy now, pay later services and tap and go have made impulse purchases easier.”
Financial comparison website Mozo’s spokesman Tom Godfrey said, “by researching prices and planning purchases you could make significant savings on everything from white goods to groceries”.
This could also include holding off on a purchase and thinking about it for 24 hours before deciding to follow through and making the purchase.
Research from online retail industry insights group Power Retail which quizzed 9430 online shoppers found 98 per cent all online shoppers were aware of buy now pay later schemes.
And it also showed 10 per cent use it whenever possible.
7) EXPENSIVE MOBILE PHONE/INTERNET DEALS
Phone users are often left on plans that they “set and forget”, telco comparison website WhistleOut’s spokesman Kenny McGilvary said.
Telcos including the big three – Telstra, Optus and Vodafone – are constantly reviewing their offers because the market has never been more competitive as smaller players continue to roll out rock-bottom deals.
“If you get into the habit of checking the market, even if it’s just once or twice a year, you’ll almost definitely find a better deal than the one you’re on,” Mr McGilvary said.
“For example you can get no contract SIM-only plans with 20GB data for under $30 a month.”
As for NBN 50 plans Mr McGilvary said they start at around $65 per month and mobile broadband no-contract deals with 500GB of data begin at $70 per month.
TOP FIVE FINANCIAL GOALS FOR 2020
1. Saving for a holiday, car or expense other than a home.
2. Building up a “rainy day” savings account.
3. Saving enough money to buy a property.
4. Reducing expenditure on expensive habits. ‘
5. Not racking up any more debt.
Source: ME survey results, December 2019.
Originally published as These are the financial habits you need to kick in the new year to get ahead
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