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Got better about saving money during lockdown? Here’s how to hold on to the habit
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Got better about saving money during lockdown? Here’s how to hold on to the habit
Some Australians found lockdown an opportunity to get better about saving money, but holding on to those habits takes work.
Got better about saving money during lockdown? Here’s how to hold on to the habit
Some Australians found lockdown an opportunity to get better about saving money, but holding on to those habits takes work.
With Australia’s economy poised for reopening, it’s important that consumers don’t lose those good budgeting habits they picked up during the pandemic.
According to Schroders Global Investor Study 2021, 68 per cent of Australian investors are more focused on their finances now than they were before COVID-19.
“The pandemic seems likely to have a long-lasting effect on people’s finances, with many investors looking to save more for retirement and prioritise saving over spending,” Schroders Australia CEO Sam Hallinan said.
Speaking to nestegg, 86 400 CMO Travis Tyler said that the conditions of lockdown encouraged many Australians to shift from a spending mentality to one focused on saving money instead.
“We’ve seen more customers paying their loans down, saving a higher proportion of their regular pay and setting up regular savings plans,” he said.
Mr Tyler revealed that more consumers are reviewing their expenses to identify where extra savings can be found.
However, he warned that these gains are at risk of being offset by the rise of the convenience economy.
When it comes to online shopping, for example, Mr Tyler said that consumers are purchasing items like clothing in smaller amounts, but doing so more frequently.
These small-value, high-frequency purchases add up quickly, he warned.
“The challenge is to be disciplined, so these smaller amounts don’t add up to the previous, larger shopping sprees that we may save for, or mentally allow for each pay packet,” Mr Tyler said.
Wisr chief strategy officer Dr Lili Sussman said that those looking to make the most of their newfound saving habits should make paying down debt a priority.
She said that the fastest way to go about this is to contribute more than the minimum each month.
“However, you should always check the terms and conditions of paying your debt down faster, as some institutions have maximum repayment limits within certain periods and additional fees associated with paying it down faster,” she added.
To help with this, Dr Sussman emphasised the importance of getting on top of your spending habits.
“You may find some expenses like monthly subscriptions coming out of your account that you forgot about,” she said.
Once you’re done paying down debt, Dr Sussman recommended focusing on building up an emergency fund target. According to her, going specific is usually the way to go here.
“Setting specific and time-bound targets for your savings is the best way to slowly build up your emergency funds and will help you feel more financially secure overall,” she said.
Another long-term indicator of financial fitness to keep in mind is credit score.
Dr Sussman said that your credit score shouldn’t be overlooked when it comes to getting your finances in shape, as it may be used by credit providers to determine whether or how much money they can lend.
She warned that those who change their place of residence should be especially careful not to miss any final utility payments, as this can cost them.
Ultimately, Dr Sussman advocated for Australians to set financial milestones and goals when it comes to setting yourself up for the future because they create a structure and context around what you’re doing.
“It’s important to know that the things you do now can make a difference down the track,” she said.
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