This post is courtesy of Kirsty Lamont, friend of Savings Guide and Director at comparison site Mozo.com.au
At Mozo we crunch a lot of big money numbers but even we were shocked to discover recently that Australians waste over $25 billion a year on interest, vices, fees and bills. From easily avoidable bank fees and credit card interest to unused gift cards, traffic fines and gambling, we could all be a lot richer with wiser habits and lot less waste.
Here are the top ten ways that Australians are wasting their wealth. Included under each item is a note from Savings Guide on how you could save money – are you guilty of any of these?
1. Credit card interest costs us $6.16 billion every year
Credit card interest is Australia’s biggest money drain – but you should be able to totally avoid it. Credit cards can be a useful tool if you pay the balance off in full each month, but are an obscenely expensive form of debt to get into. With official interest rates at record lows, you should be looking around for better options to refinance and repay debt.
Quick saving tip from Savings Guide: Stop hiding from your credit card statements. Become pro-active, repay the debts in large chunks and search for a balance transfer deal if you are struggling with interest.
Remember, making the minimum repayments on a credit card is guaranteed to drag on the debt. Pay more than the minimum at all times.
2. Tobacco costs Australians $5.52 billion per year
There’s no need for a nag here, everyone knows cigarettes are a severe waste of money and bad for your health. Compare the cost of your habit to the cost of quitting, whether that’s nicotine patches, hypnosis sessions or sheer willpower, and you’ll quickly start seeing savings once you trash the ash.
Quick saving tip from Savings Guide: Think of what the savings from not smoking will bring you. Perhaps it will buy you a holiday to Fiji each year? Also, remember that giving up smoking will give you more energy and when you feel better, you make smarter decisions about money.
3. Household food wastage costs around $5.20 billion
Better meal planning and keeping tabs on what’s in your fridge can save hundreds of dollars a year on food waste. Grabbing an expensive takeaway while a healthy salad wilts in the fridge is doubly bad money management. And if you do have leftovers or wilted vegetables, at least consider a worm farm or composting bin so it doesn’t completely go to waste.
Quick saving tip from Savings Guide: Saving money on food is the easiest way to put cash directly back in your pocket. Forget earning more money, stop over spending and reap the instant benefit. Read more about food wastage here if you are keen.
4. Gambling costs $2.57 billion a year for Australians
The only winners at the roulette table are the casino owners. If you can’t give up your dream of instant riches, at least limit the lure of Lady Luck to a weekly lottery ticket.
Quick saving tip from Savings Guide: Ever wondered what happens when you buy 200 $1 scratchies? Find out whether it’s a good strategy or whether gambling well and truly is rigged.
5. Mobile phone excess charges cost $1.5 billion
You’ve heard enough “bill shock!” horror stories to know that you should switch off data roaming when you go overseas. Keeping tabs on data usage within Australia is also critical. Some telcos will tweet you a warning when you are approaching your monthly limit, but if you miss it, you could end up with a hefty bill. Another option is to buy pre-paid packs only, so you’re cut off rather than charged when your balance hits zero.
6. Household energy waste – $1.43 billion
Do you remember to switch off lights and other devices when you’re not using them? There are tonnes of ways to save money on household energy, from investing in solar power to insulation and more efficient appliances. Leaving flat screen TVs on standby is a particular power waster.
7. Traffic fines – $1.30 billion
Observing the road rules will not only save you money but possibly your life. There may be emergency situations when an appointment overruns and your parking meter expires. But if you’re absent minded, download a free parking app that will remind you where your car is parked and how long you have left on the clock.
8. ATM fees – $0.60 billion
How many times do you rack up a pointless $2 fee because you can’t immediately see an ATM from your own bank? These fees are easily avoided by better planning. Use debit cards as much as possible, and when you do need cash, get cashback when paying for groceries or make sure your use your own bank’s ATM.
9. Bank exception fees – $0.49 billion
Exception fees are levied by banks on overdrafts and late payments, and are totally avoidable by better organising your finances. Be better aware of your balance by checking it online, and signing up for alerts if you bank offers them.
10. Unused gift cards – $0.36 billion
This is the ultimate “looking a gift horse in the mouth” (this means ‘don’t be ungrateful when you receive a gift): not bothering to use gift cards and/or letting them expire. On that plastic is actual money, albeit destined for a particular shop. If there’s truly nothing you need or want from that store, see if a friend will buy the card off you, or use it to buy someone else a present.
All this wastage is avoidable. Even if you enjoy the odd flutter on the horses, and feel you can afford it, there’s no excuse for paying bank fees to access your own money or credit card rates of 20% or more. So head online, compare cheaper banking options at sites like Mozo and stop the money wastage today!
About the author: Kirsty Lamont is a director of Mozo.com.au which helps Australians compare credit cards, home loans, insurance and other financial products. After living life to the limit in her twenties, Kirsty turned her own finances around, started saving rather than spending, and is now comfortably in the black.