Finance Dollars & Sense Heading to the (online) shops during lockdown? Here’s how to avoid overspending
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Heading to the (online) shops during lockdown? Here’s how to avoid overspending

Online shopping pandemic
Australians are turning to online shopping to relieve lockdown stress. We asked experts about how to avoid breaking the bank.
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Lockdowns are back and Australians are once again hitting the shops online.

Data from Commonwealth Bank shows e-commerce spending jumped 35 per cent above 2019 levels last week as New South Wales entered its sixth week of lockdown and Victoria plunged into its sixth lockdown since the pandemic was declared in March 2020.

The figures tell us that many Australians love retail therapy when forced to stay indoors – annual online shopping growth was almost 20 per cent higher than this time last year.

But unlike in 2020, cost-of-living pressures are rising and there is far less government support flowing into Australian bank accounts.

And so it makes budgeting all the more important if you are indeed turning to online shopping to relieve some stress.

So here are some pointers.

1. Treat online shopping like in store

The first step to avoid overspending online is to trim the size of your imaginary basket.

We spend about $50 more per purchase online than we do in store, according to data from ecommerce site Neto.

And research from Roy Morgan suggests that figure rises to $83 when we are buying groceries.

Amanda Thompson from Endurance Financial said overspending online is easier to do because shoppers can buy goods with the click of a button.

She consequently recommends treating your online basket like a physical one, and only buying what you could carry home in person.

“Attack it like you’re going to the local shops,” Ms Thompson said.

“You’ve got to have that same mindset.”

Doing this will also help you work out whether you actually need what you are buying, because it replicates one of the barriers between shopping and checkout that we experience when shopping in store.

Ms Thompson also recommended:

  • Avoiding credit cards – Reserve Bank data shows the average purchase sizes with credit cards are more than double those using debit cards
  • Delaying your purchase – If you see something you like, set yourself a 24-hour reminder and then come back and consider it tomorrow. You might realise you don’t really want or need it.

2. Set up an online shopping bank account

The second step is to put limits on your overall online spending levels.

Sort My Money founder David Rankin said a good way to do this is by setting up a separate online bank account reserved for online shopping.

He said your salary should not be paid into this account.

“Work out how much you can afford – and are happy – to transfer into this account each fortnight on the day after pay day,” Mr Rankin said.

“Then set up a recurring payment of that amount from your main bank account to this new account.

“Do all of your e-commerce spending using your new debit card.

“Once the balance of your new account hits zero, [there should be] no more spending until the next fortnightly top-up date.”

If you’re going to set up a separate bank account, you’ll want one that’s free from international transaction fees, Ms Thompson added.

“Some accounts will actually reimburse international fees,” she said.

Comparison sites Finder and RateCity have comparison lists for fee-free bank accounts and credit cards, including National Australia Bank, Citi, HSBC, BankWest and ING’s Orange Everyday account.

3. Search for free returns

Buying from sites that offer free returns is another way to keep your budget in check.

Ms Thompson said nasty surprises like return charges and delivery fees can slug online shoppers with hundreds of dollars in extra charges.

“If you return something because it doesn’t fit, who pays for that?” Ms Thompson said.

“Some shops require you to return online if you buy online, [and] you can’t actually return in store.”

Some retailers offer conditional free returns, including The Iconic, David Jones, ASOS and Bonds. Finder has compiled a big list here.

Others, such as Amazon, offer better shipping and return deals to subscribers.

That can be a good option if you shop there often. But the monthly fees should be be factored into your budget because they add up over time.

4. Buy now, pay later is a winner – if used correctly

Lastly, it’s worth considering whether buy now, pay later (BNPL) is right for you.

Much has been said about BNPL debt traps, with ASIC data showing one in five shoppers get into financial trouble with services like Afterpay.

But if you use BNPL properly, it’s an extremely low-cost form of credit, with no interest paid on most transactions and (generally) no account fees.

The keys to avoid getting into trouble are to pay on time and to stick to one BNPL account at a time.

And you should also be mindful of how retailers advertise BNPL services.

Employment Hero head of financial wellness Ray Jaramis said that retailers are starting to display prices in BNPL instalments instead of the full price.

“Statements like, ‘own this in four small easy payments’ psychologically anchors us to focus on smaller numbers,” he said.

“[It creates] the impression that an item is being sold for less.”

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