11th May 2017

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.

Related articles:
Are you spending too much?
Most common spending regrets
Demystifying your spending

 





COMMENTS

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Mindy
19th May 2017
12:29pm
You can delete Tip 4 from this recycled article. It is illegal to sell incandescent bulbs any more.
Hawkeye
20th May 2017
12:11am
I've got a reasonable stockpile of incandescent bulbs and I use them in places where I actually need some light (eg reading, cooking, workbenches, etc).
It's a fact of life that low wattage bulbs give low levels of light, no matter whether they are compact flouro, LED, or incandescent.
While it is true that CF's and LED's are a bit more efficient than the incandescent bulbs, the difference is nowhere near what the manufacturers claim.
It is a false economy to pay for lighting which is not at a usable level. And even worse when you consider the eye damage caused over the long term.
Mindy
21st May 2017
6:45pm
New LEDs are far brighter and more efficient than older LEDs.
Cheezil61
23rd May 2017
6:03pm
Agree & doubt that the led's are going to last 20years? I hope they have a warranty for 20 years because they are pretty damn expensive to outlay if you are on a budget!!
Cheezil61
23rd May 2017
6:03pm
Agree & doubt that the led's are going to last 20years? I hope they have a warranty for 20 years because they are pretty damn expensive to outlay if you are on a budget!!
Cheezil61
23rd May 2017
6:03pm
Agree & doubt that the led's are going to last 20years? I hope they have a warranty for 20 years because they are pretty damn expensive to outlay if you are on a budget!!
Cheezil61
23rd May 2017
6:03pm
Agree & doubt that the led's are going to last 20years? I hope they have a warranty for 20 years because they are pretty damn expensive to outlay if you are on a budget!!
Cheezil61
23rd May 2017
6:03pm
Agree & doubt that the led's are going to last 20years? I hope they have a warranty for 20 years because they are pretty damn expensive to outlay if you are on a budget!!
Cheezil61
23rd May 2017
6:03pm
Agree & doubt that the led's are going to last 20years? I hope they have a warranty for 20 years because they are pretty damn expensive to outlay if you are on a budget!!
Cheezil61
23rd May 2017
6:03pm
Agree & doubt that the led's are going to last 20years? I hope they have a warranty for 20 years because they are pretty damn expensive to outlay if you are on a budget!!
Cheezil61
23rd May 2017
6:03pm
Agree & doubt that the led's are going to last 20years? I hope they have a warranty for 20 years because they are pretty damn expensive to outlay if you are on a budget!!
Cheezil61
23rd May 2017
6:03pm
Agree & doubt that the led's are going to last 20years? I hope they have a warranty for 20 years because they are pretty damn expensive to outlay if you are on a budget!!
Cheezil61
23rd May 2017
6:03pm
Agree & doubt that the led's are going to last 20years? I hope they have a warranty for 20 years because they are pretty damn expensive to outlay if you are on a budget!!
Libby
19th May 2017
1:12pm
Extended Warranties worked for me. My hard drive video player wouldn't work and the warranty expired on 31 December after 4 years of use, I managed to get it fixed just before warranty ran out. It was the first time I had it fixed. If the repairers deemed it not fixable I would've got a new one free! Still going well.
pedro the swift
19th May 2017
1:16pm
i don't think it has been made illegal to sell incandescent bulbs.They are still necessary in some applications. Oven lights comes to mind as one. I doubt LED or fluoros would handle the temp.
Hasbeen
19th May 2017
4:42pm
Cash has been my simple method of budgeting for years.

Once a fortnight I put enough money +15% into my "Bill Paying A/C" to pay all the fixed bills, rates, insurances, car rego, power & phone bills, with the 15% to cover repairs & maintenance. I pay myself in cash, the amount I budget for food, fuel & entertainment & general living expenses. That has to last with no exceptions

A couple of weeks with no fuel in the car, & Corn Flakes for dinner soon teaches you to cut your cloth reasonably carefully. Actually this usually builds up a enough to supply the odd treat, & I am never scrambling to find the money for the power bill or car rego.
Hawkeye
20th May 2017
12:18am
Hasbeen, are we really expected to believe this?

I reckon anyone with at least half a brain would have raided some of the extra 15% in the "Bill Paying A/c" and upgraded to Coco-Pops.
52-KID
20th May 2017
10:53am
My biggest spending problem at the moment is none of these. I get sucked into donations from phone calls. I can so no to regular donations, but when they ask can I just manage a small one off donation I'm gone. I know I have to learn to be tougher, but there are so many genuine charities needing money, I find it hard to say no, so meanwhile this week in particular, I have to figure out what to pay - at least my food and rent are done.
Mindy
21st May 2017
6:47pm
get a silent number and get yourself on the 'do not call' register.
Alula
21st May 2017
7:54pm
Single use plastic water bottles cost the planet too - and we've only got one planet.
Cheezil61
23rd May 2017
6:41pm
Apologies! Stupid laptop playing up here & I cannot seem to delete any of those 4000 reply comments, sorry. Must add anyway that I tend to look at Australian grown food/products when shopping before no name brand items if there is a choice (unless there is a massive difference in price or nothing Australian available, support local jobs they are few & far between now!


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