'Financial Waste' Is Costing Aussies: How Many Of These Money Mistakes Are You Making?
There’s no denying it: life is expensive. From paying the rent or mortgage, to the rising cost of electricity, phone bills, internet and medical bills – the expenses just keep coming.
Then just when you think you’re on top of things, an unexpected bill arrives and you’re on the back foot yet again. There are ways to stop this from happening -- but most of us are so busy 'doing life' that we end up making mistakes with our money.
According to uno's Household Financial Waste Report, we are collectively wasting billions of dollars a year by being idle when it comes to our expenses. They found Australian home owners waste $4.2 billion a year alone on home loans simply by not asking for a better rate.
Then there's the $9 billion we spend in food waste, $1.8 billion in unused gym memberships, $551 million in bank exception fees (charged when you go over your credit card limit) and $332 million in unused gift cards. It's enough to make your eyes water, isn't it?
Licenced financial adviser and author Helen Baker told 10 daily some of the other common money mistakes we're making and what we can do about them:
Falling for the credit card points trap
Helen said no matter what anyone tells you, points are not free. In fact, many rewards programs are aimed at making you spend more than necessary.
"Rewards credit cards usually have higher interest rates and annual fees, too. Consider switching to a lower rate card with no annual fee and you could save $250 a year."
Neglecting your debts
When was the last time you had a close look at your mortgage, car loan and other debts to see if you’re getting the best deal? Sure, it’s not my idea of a fun time either, but it could save you thousands, Helen advised.
"Review your debts to ensure they’re structured to minimise the interest. Speak to your bank or a mortgage broker and ask what’s possible," she said.
"If you have a home loan of $500,000 at an interest rate of 4.5 per cent, you’ll pay $412,034 in interest over 30 years. Reduce it by 0.2 per cent and you’ll save $26,452 over the life of the loan. That’s almost $1,000 a year."
Not making the most of your superannuation
Helen said young people often think they’re so far away from retirement that super isn’t relevant to them.
"They ignore it, resulting in minimum savings, multiple super accounts and money eaten up in excess fees. But superannuation is one of the most tax effective investments you can make," she said.
"While retirement might seem far away, ask any older person and they’ll tell you the years will fly. Don’t let your super fall by the wayside."
And for those who are older, Helen said it's never too late to make a difference to your super. Age actually allows you to take advantage of strategies younger people can’t.
"If you salary sacrifice $20 a week from your pre-tax salary and put it into your superannuation, that’s $1,040 and a tax saving of $239 each year," Helen said.
"Doing this for just one year, your $1,040 could become $4,538 by the time you reach retirement, making you an extra $3,500."
Buying your lunch every day and throwing away food
It’s a no-brainer, but so many people fall into the habit of stumping up their hard-earned cash every weekday for a bite to eat.
"Although everyone enjoys catching up with friends over lunch from time to time, bringing your own lunch just twice a week could save you $1,500 a year," Helen said.
That's not to mention the amount of money we waste in uneaten food that ends up in the bin. So taking food from home and not buying your lunch out really saves you twice.
Paying for apps or memberships you no longer use
There’s an app for nearly everything these days, and a lot of them charge ongoing subscription fees, Helen advised.
A few dollars here or there doesn’t seem like much, but with most subscription-based apps costing a few bucks a month, cancelling a handful of unused apps could save you $200 a year.
Not shopping around on insurance
If you’re not shopping around on health, care and home and contents insurance, you’re doing yourself a disservice. Insurance companies bank on the laziness of their customers, hiking their premiums each year knowing full well most customers won’t bat an eyelid, according to Helen.
"Work out how much you’re paying each insurance provider and give them a call. Let them know you’re looking for a better deal and ask what they can do for you," Helen suggested.
"If they won’t budge, jump online, get a quote from a competitor and ask them to match it. You’ll be surprised how fast they respond once they know you’re ready to part ways. Doing this could save you hundreds."
What else can I do?
uno CEO Anthony Justice told 10 daily there are other easy fixes you can introduce to further reduce your household financial waste.
"Don't do a big grocery shop if you’re planning to eat out throughout the week, or keep track of memberships and cancel those you won’t use," he said.
"Getting stung with a small cancellation fee is better than paying for 12 months of gym membership if you never step foot in the door."
Do you know what your current home loan interest rate is? uno's report found more than half of home owners don't. So while you may have got a great rate at the start, Anthony said a good deal can turn into a bad one pretty quickly.
"To avoid this happening, homeowners should keep an eye on their interest rate and shop around for better home loan value," he said.
There’s so much to think about these days. With the constant pressures of work and family life, it’s tough to keep on top of it all – but the more you pay attention to your expenses, the better you’ll get at avoiding costly mistakes. It’s your money – so hang onto it.
Featured image: Getty