As we enter the traditional Christmas holiday spending season, RaboDirect provides a timely reminder to our valued customers on how to better manage their finances and avoid a New Year debt hangover.
This week, RaboDirect announced the major findings from our National Savings and Debt Barometer – one of the largest and most comprehensive surveys of Australian attitudes and behaviours around savings and debt*.
Key findings of the Barometer were: a third of Australians feel they are ‘constantly in the red’; and alarmingly, 80% of the population don’t have a formal budget. “This is the time of year when we are all spending on additional items, such as gifts, festive drinks, holidays, post-Christmas bargains, or all of the above.” RaboDirect General Manage, Greg McAweeney said.
“Our recent survey aimed to raise awareness of how we can help Australians to better appreciate their financial position and provide insights into the way they are handling their finances, and this is particularly relevant for this time of year.”
“We recommend a back-to-basics approach to financial fundamentals, like proper budgeting, selective debt reduction or learning to avoid excessive debt in the first place, and having a regular savings plan.”
Some tips for better financial management include:
- Set a budget (revisit regularly and adjust as necessary to match personal/financial needs)
- Spend less than you earn – see point 1!
- Find good, independent tools and information, such the Australian Government’s ‘Understanding Money’ website
- Pay off your most expensive, non deductible debt, first
- Regularly check that your financial products (mortgage, transaction and savings account, insurance, credit facilities etc.) suit your needs and offer the best value
- Have your salary paid directly into a high interest savings account rather than leaving money idle in a low-interest bearing account
- Seek help early if things get out of hand
Our attitudes to debt
The National Savings and Debt Barometer found that 74% of people believe paying off their debt is the best way to save money.
One in five credit card holders worry about not paying off their bill in full each month, yet one in six are happy to make purchases knowing they cannot pay for it in the interest free-period.
And one third of respondents consider their financial situation has worsened in the last one year and have taken steps as a result. They have cut back on luxuries, such as dining, entertainment and holidays, and some have also considered their day-to-day shopping habits.
Our savings behaviour
The Barometer found that 28% of Australians say their savings would only last two months if they lost their job, while just over one in 10 (13%) have no savings at all. This paints a worrying picture at a time of the year when the job market traditionally slows down.
Low interest transaction accounts are the most popular home for ‘savings’ with 46% of regular savers putting money in their transaction account (representing 41% of total savings in last six months). This is despite the fact that interest paid on these accounts is negligible and often eaten away by fees.
*About the National Savings and Debt Survey
The RaboDirect National Savings and Debt Survey is a large, nationally representative on-line survey. It was commissioned by RaboDirect and conducted by TNS, Australia’s largest custom research company. The survey was conducted in October 2010, among Australian financial decision makers aged 18-65 years. A total of 2,268 adults participated in the survey.
