How to become a cautious spender and stashing your cash
Many Australians have been forced to become much more cautious with their cash in a bid to financially survive during the pandemic. Here’s how to do it.
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Being cautious with cash has become fashionable during COVID-19 as many households continue to reign in their spending.
Australians have managed to amass a whopping $100 billion in savings over the past 12 months – in September alone they siphoned off $16.5 billion into deposit accounts.
This new mindset to beef-up financial buffers has been essential for many people after suffering income hits during the pandemic.
New independent research compiled on behalf of financial institution ME quizzed 1000 Australians and found during the pandemic:
• 77 per cent have adopted a more cautious mindset to managing money.
• 68 per cent don’t feel like they are in financial trouble.
• 54 per cent are saving more.
Mandy Caplan, 30, and her fiance Simon Oboler, 31, both work in marketing and had their incomes hit during COVID-19.
In January the couple moved into their newly-purchased home, a three-bedroom house at Murrumbeena in Melbourne’s southeast, and Ms Caplan says they had to quickly reassess their spending.
“I took a 15 per cent pay cut, that’s come back a little bit now and my partner changed jobs so there was a few months he was on JobKeeper,” she says.
“We had just moved into our new home and all this happened so we had to sit down and really work out our finances.
“It’s kind of been good for us because we’ve been much more cautious with money.”
The couple managed to stash about $780 a month by not needing to travel for work, pay for petrol, go out for meals or spend on beauty and hair treatments.
Tribeca Financial’s chief executive officer Ryan Watson says the first step to being a cautious spender is getting a clearer picture of your cashflow.
“We teach and encourage our clients to take charge of their money, they do this by understanding their cashflow,” she says.
From there Watson says it’s about putting strategies in place.
“The key to cautious spending is setting up the right banking structure, after all structure creates freedom,” he says.
“For instance, set a limit to the money you leave in your day-to-day spending account – this will virtually eliminate your ability to overspend leaving you with money for a rainy day.”
Watson says simple steps such as calculating your grocery costs as you throw them into your trolley can help keep check of what you’re spending.
He also warns to be careful of what you do spend in the run down to the festive season.
“Money can slip through your fingers as a result of Christmas parties and presents which means it’s even more important now to spend with caution,” Watson says.
ME’s spokesman Matthew Read says for those in a position with some extra cash they should use it wisely.
“It’s an opportunity to pay down debt faster, particularly bad debt such as credit cards,” he says.
“If you have a savings buffer it’s really important for peace of mind knowing you can cope if you lose your job.”
He also says for those who are spending, many are being far more cautious about what they spend their money on.
“There’s been a lot of spending on gardens, houses and renovations and improving assets,” Mr Read says.
“It’s about spending on things that will save your spending in the future, for instance making sure things are maintained properly like your car or your home,” he says.
HOW TO BE A CAUTIOUS SPENDER
• Understand your expenditure and cashflow.
• Set aside different buckets of money to stash cash.
• Arrange automatic direct debits into applicable accounts.
• Build up a savings buffer.
• Limit impulse spending.
• Plan your purchases in advance.
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