18th May 2018

The 10 terrible spending habits to change right now

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buying bottled water
Ben Hocking

Are you breaking the budget regularly? We know we are supposed to spend less money than we earn, but that isn’t always easy in practice. Below, we outline the bad spending habits that could be leading to your budget blow-outs so you can address them and get your finances back on track.

1. Credit cards
The top three causes of bankruptcy in Australia are unemployment, divorce and excessive use of credit cards. With ready access to credit cards it is way too easy for people to live beyond their means. If you are not paying the balance off your credit card at the end of every month you need to change your habits. The first thing to do in this situation is to stop putting ordinary living expenses on your credit card. If you have only budgeted for a certain amount of groceries per week, take only that amount of cash to the shops and leave the card at home. This is a great way to force yourself to stick to your budget.

2. Paying easy-to-avoid fees
There can be few worse habits than literally paying for nothing. If your bank charges for using another bank’s ATM, either withdraw money at your own bank’s ATM or change to a bank that doesn’t charge those fees for their cards. Alternatively, you can make cash withdrawals when you are doing your supermarket shopping. If you are at a shop or supermarket that places a surcharge on credit card transactions, try to pay cash or eftpos your transactions at these stores instead.

3. Drinking bottled water
Staying hydrated is super important, but choosing bottled water over tap water may be costing you a lot more than you think. If you buy bottled water regularly it can easily cost you up to $1000 per year. Switching to tap water can make a huge difference, and if you refrigerate the bottle overnight, you won’t be able to taste the difference.



4. Using incandescent light bulbs
They might seem cheaper at the time of purchase, but buying the cheapest light bulbs at the supermarket is costing you money on your power bills and over the life of the bulbs. LED light bulbs last for up to 20 years and consume considerably less power. If you are still looking purely at the price in the supermarket and picking the cheapest option, you are simply wasting good money.

5. Buying extended warranties
If you are buying an expensive item the salesperson will almost always try and sell you an extended warranty. This may seem like a smart idea, but it is often a waste of money. If an item is going to fail it will usually happen within the first 12 months (when you will be covered by the regular warranty), or after the period of the extended warranty. If your item fails after the initial warranty period you may still be covered by the Australian consumer law if the purchase did not conform to expectations.

6. Late fees
Many of your utilities will offer a discount for paying on time, but if you are missing the deadline regularly, you are pouring money down the drain. If you are regularly forgetting to pay your bills on time, it could be worthwhile setting up a direct debit arrangement to make sure that you are not paying late fees or missing discounts.

7. Buying brand-name products
Sometimes there is a difference in quality between a brand name product and its generic equivalent, but a lot of the time you are just paying more for a fancy box, or plastic wrapping. Often the products are made in the same factory. For any item that you use you should at least try the generic equivalent before opting for the brand name equivalent. If you can tell the difference, and you think it is worth paying for, continue, but otherwise make the switch. Most supermarkets these days offer a premium generic brand that is still considerably cheaper than most of the brand name products on the shelves.

8. Gambling
Your chances of winning Tattslotto are so small that they are almost exactly the same as not buying a ticket. If you are gambling you should consider it as an entertainment expense for budgeting purposes and that means you need to compare it to other entertainment expenses. If you still find gambling provides you with more entertainment value than seeing a movie, a live performance or going out to dinner with family and friends, you may want to keep it in the budget. If gambling is a problem for you, you can find gambling assistance services in your state or territory here.

9. Spontaneous spending decisions
Sales people are very good at their job. If you see something and buy it immediately are doing yourself a disservice. Force yourself to think about every large spending decision that you make. Always walk out of the store before purchasing and do some quick research, to make sure that the price is as attractive as it sounds. More often than not, that sale price won’t end up being quite as good a deal as you think it is.

10. Paying for unused services
Beware buying 12-month memberships, especially if you are the type of person who will try something and then quickly move onto the next thing. Gym memberships are perhaps the most common way people fall into the trap of paying for unused services. People join with the best of intentions and then things get hard and they start attending less and less frequently. If possible you should pay as you go, or start by paying monthly membership fees. Review your bank statements and see what memberships or fees you are not using (these may also include regular app services for your smartphone) and cancel them to start saving money.


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COMMENTS

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patti
22nd May 2018
12:40pm
Phew, I don't do any of those things, does this mean I will be safe and always have plenty of money to live on???
Knows-a-lot
22nd May 2018
3:30pm
Lots of good advice here.
musicveg
22nd May 2018
4:27pm
Never buy bottled water, it is more contaminated than you think, tests show most contain micro particles of plastics. Invest in a water filter for your tap.
http://econews.com.au/57130/who-health-review-as-micro-plastics-found-in-90-of-bottled-water/
Charlie
22nd May 2018
5:47pm
My pension seems to go further if I pay cash for everything.

I started doing this when I couldn't understand the bank statements. IT was always printed out of order to the time of the purchase, only ordered to the day. Then the names of the businesses were not their common names, but company names.

Some supermarkets make me ask for the docket, every time. I prefer it when they separate the bank notes from the paper and drop the docket in the bag.
SuziJ
23rd May 2018
9:48am
As for separating the docket and change, I do the same, put the docket into the bag with the goods and the change into my wallet. If I hold up the next customers, then tough!

Yes, bank statements can be very hard to understand.

If you pay your energy & phone bills @ the Post Office, it will cost you extra.

Use your internet banking to set up the BPay information for your bills, then every payday, login to your internet banking and pay your bills before you leave the house for the day.

If you need help, visit your local branch and they'll help you set it up.

The BPay information is usually found at the bottom of the second page of your energy account, and the bottom of the first page of your phone account.
SuziJ
23rd May 2018
9:25am
For paying your bills - I suggest that you contact your energy company and try to negotiate a good discount for paying on time. My energy company gives me a 3% basic (given to all customers) and a 29% (because I chose to compare their rates with my ex's company's rates) discount every 3 months. So far since moving into my unit in December 2016, I've saved over $1,000. Every payday, I log into my internet banking and pay all my bills before I even get out of the unit to do any shopping. Then I know that my bills are paid.

I wouldn't ever let my energy or phone company deduct any funds from my account, as if the bills are due on a day that's not in a pay week, then I'm in big trouble!

I'm on the brink of ditching my contents & car insurances If you think of it, you're paying for something that may or not happen, and it's quite a bit of money if you've had insurances since the day you purchased your first car, and moved out of home into your own premises. I'd rather put the premiums into a special savings account for those times when I need it. Then I don't have to pay the excess on any claim as the money is there ready for me to use as I need. Then you add on the 'excess' you have to pay before they pay anything - it's ridiculous!

As for buying non-brand food - there's a very big difference in some products. I purchase Sultana Bran, but the alternative non-brand tastes to me like cardboard - no thanks.

I've yet to find an LED light bulb that shines enough light so that I don't have to strain my eyes to do cross-stitch, especially black over black (my family tartan has black in it) - it's not a good idea. Give me an incandescent light any day!
musicveg
23rd May 2018
3:52pm
I just paid my car insurance, I was able to save some money by phoning and asking for any discounts. Not wise to be without, even if you don't have insurance for your own car you might be up for paying someone else's expensive car. There are cheaper deals, especially if you don't drive much, look up on the internet and compare. I was going to change to a cheaper deal with another provider but decided to stick with what I know. Reviews online are only the bad ones, hard to find reviews about claims, because that is when the trouble starts.
Jan
25th May 2018
8:15am
Shouldn't gambling be up there at Number 1?
PlanB
12th Jun 2018
1:05pm
I follow all those rules but I do use a C/C to MY advantage -- always pay on time -- never gamble EVER -- always pay on or b4 time.
KB
9th Jul 2018
2:18pm
Good advice. If you are a pensioner then there is no cost to paying bills at the post office,Try to pay something off your bills on your bills on a regular basis. Some electricity companies offer a discount if you pay on time known as an early bird discount, Keep your change from purchases in a jar.The money will grow


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