YOLO spending sees 1 in 5 Australians saving nothing each week
Suncorp Bank's annual Spending and Savings Report has revealed that Aussies’ spending habits are growing worse for wear since COVID-19, with thousands of young home-seekers opting for impulse purchases over slow and steady savings schemes.
The age-old stereotype that millennials spend their money on trivial purchases like avocado on toast now has some data behind it, with Suncorp Bank’s annual Spending and Savings Report uncovering that 1 in 5 Australians are saving nothing each week.
The Report discovered that over the past year, some Australians have fallen victim to the You Only Live Once (YOLO) style spending habit, potentially influenced by the surging price of property and unpredictable COVID-19 lockdown restrictions.
The Report finds that while the average person saves $377 per week (or $19,604 per year), many Australians find themselves bound by their Netflix subscription and monthly internet bill, while more than half of those surveyed agreed they could probably live without food delivery services like UberEats, going to the movies or avo on toast to reach their savings goals.
Spending less money on eating out, ditching UberEats, and meeting friends at home rather than at a bar helped us save for our home deposit.Emily Fitzgerald, Homeowner
Suncorp Executive General Manager Home Lending Bruce Rush says that impulse spending can be the defining habit that leads to younger people’s long-term financial dissatisfaction.
“Australians keen to build up their savings should resist the urge to reduce stress with a quick online purchase or by putting their card down on the bar tab if that’s something they don’t usually budget for,” he says.
However, some Australians are proving to their peers that a few sacrifices can lead to big payoffs. Recently married couple, Emily (Primary School Teacher, 29 years old) and Jack Fitzgerald (Financial Accountant, 31 years old) purchased their first home in Westlake, Queensland after renting together for two years.
“We spent one year working as English teachers in Vietnam which taught us pretty quickly how to go without some of the luxuries in life so we could travel and afford to live,” Ms. Fitzgerald said.
If you are interested in buying a home it is worth talking to your Bank or Broker to understand how much you will be able to borrow and what you need to be saving to make your home ownership dream a reality.Bruce Rush, Suncorp Executive General Manager Home Lending
Mr. Rush says that while having a savings goal in mind can be daunting at first, Aussies need to be reminded that sticking to a steady budget will help make the long-term goal more achievable.
“Homeowners who are successful in getting on the property market generally have built up a five per cent deposit with strong and sustained savings habits, but of course the closer they can get to a 20 per cent deposit, the less Lenders Mortgage Insurance (LMI) they will need to pay."
Follow even just one of these simple rules from behavioural psychologist, Phil Slade to start saving better.
- Live by an 80-20 rule – No matter how much you earn, learn to live on 80 per cent. Calculate 20 per cent of your monthly/fortnightly or weekly income and put that amount in a savings account. The other 80 per cent you live on to pay bills, or have a bit of fun with.
- Make it harder for yourself to spend the money – set up sub-accounts or buckets that are not directly attached to a ’spending’ card to help you prioritise your savings, and give names to those accounts that correspond to goals or big expenses (e.g. School fees, utility bills or holiday fund). Also, resist the urge to use ‘buy now, pay later’ schemes.
- Increase your accountability circle – got a goal but haven’t told anyone about it? By increasing your accountability circle and telling either your parents or the closest people to you about it, it can help you stay accountable for the goal. You can tell them about all the achievements you’re making along the way and they can feel a part of your journey.
- Set yourself milestones – Most people get a buzz when savings accounts reach a goal. Set yourself milestones and then treat yourself when you reach it or set an even higher goal for next time.