While there’s an increased desire post-GFC to boost savings accounts, Aussies might not be restaining their purchases to just what they truly need.
According to our National Purchase Behaviour Poll (February 2013-Nielsens), it’s more likely for Australian savings to be sidelined by impulse buying.
The results polled more than 1,785 people and showed while many are putting money towards house deposits or high interest savings accounts, more than 81 per cent of Australians had made an impulse purchase in the past six months.
What exactly are these impulses?
Impulse buying is nothing new, and a favourite purchase for Australians is fashion. Clothes and shoes make up 30 per cent of all impulse purchases, with 59 per cent of Aussies picking up clothes on a whim in the past six months and 32 per cent slipping up on new shoes.
If you are the ‘man of the house’, you may not be surprised that women are around twice as likely to buy these items on impulse compared to men. However, the men have their own vices. They are twice as likely to impulsively drop cash on computers, tablets and mobile phones.
Still, 85 per cent of women are guilty of an impulse purchase in the past six months, compared to 77 per cent of men.
Is Australian impulse buying different to other parts of the world?
Geography, too, seems to play a part in how much we spend. Sydney is already known for being among the most expensive cities in the world, yet habitual spending in the harbour city is rife. Around 84 per cent of Sydneysiders have made impulse purchases in the past six months. Melbourne followed closely at 82 per cent.
The US (arguably the global capital for consuming) fares better than us. The National Endowment for Financial Education recently surveyed more than 2000 adults finding 70 per cent had purchased something big or small on impulse in the previous month.
What are the consequences of these temptations?
Unfortunately for Australians’ credit debt, our spur-of-the-moment purchases are usually destined for our plastic. Around 38 per cent say they are most likely to buy on impulse using a credit card rather than debit cards, key cards or cash.
Meanwhile, the rule of only spending what’s in your wallet is lost on the younger generation with 74 per cent of 18 to 24-year-olds and 62 per cent of 24 to 39-year-olds likely to spend cash if it’s there.
Fortunately, resisting the temptation to spend money on-hand does grow with age. Only around half of 40 to 54-year-olds and one third of over-55s are tempted to use that cash.
How much do we spend on impulse purchases?
You might think nothing of the odd urge to spend on impulse. However, Australians do fork out big bucks for their purchases. A third of Aussies spent at least $500 on impulse in the past six months.
Men seem to have more trouble than women when it comes to their impulses for bigger purchases. Around 35 per cent of men hit $500 for their impulse buys, compared to only 27 per cent of women.
Imagine putting that same impulse purchase cash into a 4.95 per cent high interest savings account. You would have close to $13,000 in around 10 years ”“ interest kicks in almost $3000 on top of your own contributions.
The desire to make impulse purchases seems to be deeply ingrained in the Australian psyche. However, if you can identify those impulses and distance them from your cash holdings, you may find an easy path to amassing some substantial savings.