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Being responsible with money has taken on a new meaning in today's day and age, with digital banking features, BNPL (buy now, pay later) services, and a myriad of other fintech offers like budgeting apps available for consumers to use from paycheck to paycheck.
From credit card offers to BNPL and limited time cashback offers, there is no shortage of financial products and services that can help you optimise your spending and help you take greater control over your budgeting.
But all of these dynamic financial products and services should also be utilised responsibly to make sure that you're consistently spending within your means. It's vital to have the right information and education to make well-informed spending and budgeting decisions that benefit your financial health.
So, what should all smart shoppers know when it comes to spending their digital dollars? Thankfully, this guide will provide some tips on how to navigate the digital finance minefield so you can spend wisely and reach your savings goals.
Understand your spending
The first step towards responsible consumption is understanding where your money goes. The average household expenditure was around $2507 per week in 2022 with housing, food, and transport topped the list of expenses.
Unfortunately, Australia's economic landscape post-pandemic has seen the basic costs of living skyrocket, which has put even further strain on the family budget.
With such significant outlays, tracking your spending can highlight areas where you might be able to cut back or reallocate funds to save or invest. Simply put, there has never been a better time to establish a household budget and stick to it! Doing so is the cornerstone of any family's financial health.
It's important to keep in mind, however, that maintaining your household budget is a collective effort. Parents may opt to include their kids in the process of developing their household budget to ensure that their school-aged children can learn the value of money and smart spending in real-world contexts.
As more parents are viewing their children as active and valuable members of their households, taking the opportunity to teach your kids about the value of money in contexts like doing grocery shops or budgeting for the extracurricular timetables, can help prepare your kids for a life of responsible spending.
Avoiding impulse purchases
What's the biggest threat to 'responsible spending'? For many of us, the first answer that comes to mind is naturally going to be impulse purchases. Impulse buying is no longer just about dodging the sweets at the cashier or indulging in dessert when dining with friends.
Temptation is everywhere these days, with social media apps like Tiktok and Instagram bombarding us with offers tailored to our interest every second of every day.
Thankfully, recent market reports reveal that Australian consumers have been cutting back on their impulse purchasing habits as we settle further into cost-of-living price hikes.
Even so, if you're guilty of having made a 'checkout aisle purchase' in the past few months, then cutting out impulse spending is definitely a smart spending tip that you'll want to keep in mind.
Alongside doing plenty of research before finalising a purchase, Aussie consumers are also advised to set self-imposed waiting periods for those non-essential or luxury items, aligning their recreational purchases with a budget-friendly time of the year (i.e. EOFY sales or holiday sales periods) and also giving you a cooling off period to determine whether the purchase is actually something you want to proceed with.
Spending responsibly with credit
And that leads us to one of the most heavily contested (but still undeniably valuable) facets of responsible consumership: credit spending. The ease of putting transactions on credit cards while earning rewards at the same time is appealing to many Australian consumers, to say the very least.
But we need to teach ourselves and our children that credit spending is not the same as debit spending, and as such, spending with credit cards should be carried out a little differently.
In other words, when looking into credit card offers, be mindful of key elements like:
- Interest rates
- Interest-free periods
- Rewards programs
If you're in the market for your first credit card, a new card or an additional card for your family, a considered approach should be taken to ensure this card aligns closely with your spending patterns and financial objectives.
Not every card offer is considered equal. Each come with different terms, rewards and offers for coming across that need to be considered.
For instance, credit cards that accumulate travel points are likely to offer more value for consumers travelling regularly.
Conversely, for those whose primary goal is to minimise expenses, a different approach is warranted. In this scenario, a credit card that boasts no annual fee and offers a competitively low-interest rate stands out as a prudent choice.
These cards often strip away unnecessary costs by providing more modest rewards programs, ensuring that you're not paying more than you need to for the convenience of credit spending.
By carefully evaluating the features and benefits of the credit card offers available to you, you can be better positioned to find a credit card that aligns with your household's shared financial goals.
Educating yourself
Our final smart spending tip for you is simple: keep studying, and stay in the loop with economic news updates. Staying informed is key to being a responsible consumer.
Understanding your rights under Australian Consumer Law, keeping abreast of financial news, and learning about personal finance can empower you to make better spending decisions. Resources like the ACCC website, financial blogs, and consumer advocacy groups can provide valuable information.
Being a responsible consumer in Australia today means more than just managing your finances wisely. It involves making informed, ethical, and sustainable choices that benefit not only your own financial health but also society and the environment.
By understanding your spending, making smart choices about credit, supporting ethical brands, and investing in quality, you can become a savvy and responsible consumer.
This information is of a general nature only and should not be regarded as specific to any particular situation. Readers are encouraged to seek appropriate professional advice based on their personal circumstances.