The decreasing reliance on cash is leading people to lose control of their finances.
According to new research, Australians’ decreasing reliance on cash is leading people to lose control of their finances.
Choosi’s Alternative Payments Report found that while most people enjoy the ease and convenience of using alternative payment methods, spending behaviours are changing as a result of not needing to physically hand over cash.
More than seven in 10 respondents (71.3 per cent) think alternative payment methods make it easier to spend money that they would not spend otherwise, and more than a third (34.4 per cent) of those using these methods feel they overspend.
Choosi spokesperson Katrina Foster said: “It’s clear that alternative payment methods can be beneficial to the everyday Aussie and are now an integral part of our day-to-day lives. However, it is concerning that not having to hand over physical cash could be leading us to become blasé about our spending.
“Our research shows a steady increase in how much Aussies are spending through alternative payment methods. Whilst that’s not necessarily damaging in itself, it’s important that Aussies are conscious of the amount they are spending and how all these purchases can add up.”
Aussies have increasingly embraced alternative payment methods, spending a total of $86.97 billion annually via tech-driven platforms, according to the report.
Over two thirds (67 per cent) of Aussies use alternative payment technology, such as tap-and-go, to make everyday purchases. Those using these methods estimate doing so for 61.9 per cent of their routine purchases, which amounts to $136 out of an average $220 weekly spend.
Interestingly, the research also sheds light on the fact that Aussies are regularly overspending at social events. Over half of respondents (53.9 per cent) said they end up overspending at social events such as drinks or meals out with friends, and more than two in five (43.5 per cent) admit they have avoided going to social events to dodge awkwardness about ‘financial etiquette’.
In addition to this, over a quarter (27.1 per cent) have experienced disagreements with friends over money. Of these, close to half (47.3 per cent) admit to these arguments resulting in lost friendships.
However, there is evidence that Aussies are making a more conscious effort to get their overspending under control. Close to half (48.8 per cent) say they follow a rough budget and, of those who have at least one credit card, close to two-thirds (64.7 per cent) make the full payment every month.
“As the use of alternative payments becomes more common, Aussies are naturally factoring in these behaviours into how they budget for routine spending and social commitments,” Ms Foster said.
“There’s already been a shift in spending habits, with Aussies increasingly hosting social events at home and being more sensible about cutting down on easy but unnecessary purchases to reign in overall spending.
“This research emphasises the importance of keeping track of our individual spending habits, particularly under the social pressures that go hand in hand with adhering to financial etiquette.
“It is encouraging to see that Australians are taking the necessary steps to minimise financial stress and maintain positive relationships with friends and family.”
Do you use cash to pay for routine items, or do you use a cash alternative? Do you find it harder to keep track of your money when using alternative payments? What advice would you have to help people manage their budget when they are not using cash?