Australian millennials claim paying bills on time and budgeting are better stress relievers than exercise, yet a majority struggle to prioritise their financial health.
And with younger Australians bearing the brunt of the recession, experts say it’s a great time to introduce new goals and savings plans.
Research commissioned by Commonwealth Bank found 73 per cent of millennials struggled to prioritise their finances, even though most said staying on top of their money (64 per cent) relieved stress more than anything else – including daily exercise (50 per cent).
Customers who confidently listed their monthly bills were found to be three times more likely to achieve their long-term savings goals than others.
But roughly a quarter of men (26 per cent) and 16 per cent of women were likely to bow to social pressure and splurge on the latest technology and fashion.
Sydney-based gym supervisor Megan Kearley is one such millennial. Before the pandemic, she unwittingly spent about $400 a week on restaurants and subscriptions while doing little to track her monthly bills.
But the 26-year-old said spending months locked down was a major reality check, with her savings account looking healthier as a result.
“Because we were home so much, I realised how much I could not spend and still enjoy myself,” Ms Kearley told The New Daily.
“And itemising my expenses was the penny-drop moment where I started to take a serious look into my spending habits and tailor my lifestyle to start saving properly for a vacation or a house or a car.”
Money experts often advise people who are serious about saving to track their spending. But in a world where people can buy almost anything at the touch of a button, it’s no guarantee of success.
Commonwealth Bank head of behavioural economics William Mailer said credit cards and buy-now-pay-later services, for example, had made it harder to resist impulse buys by reducing the “pain of paying”.
“We used to count out our cash and that would come with an immediate negative sensation, and the downside of new products is that it’s now almost seamless to spend money, and that can mess with our savings goals,” Mr Mailer told The New Daily.
“There’s also a unique social context where [millennials] are digitally engaged and exposed to social media and targeted marketing that adds more social pressure to spend.”
But technology, including CommBank’s Bill Sense app feature, could also hold the key to helping people regain control as the world moves to a “new normal,” Mr Mailer said.
“Banks are bringing out predictive tools that look at how our income profiles change and found what expenses and bills they can reduce, as well as others that provide immediate feedback as you’re spending to replicate that cash feel,” he said.
Ladies Finance Club founder Molly Benjamin said she’s seen more people drawing up budgets for the first time, as the pandemic wrested certainty from their finances.
Ms Benjamin said investing enough time and laying the foundations for a system “of success” can not only make it easier to get on top of money, but make the process of saving happen automatically.
“The pandemic has really highlighted for a lot of people the importance of having an emergency fund, paying down high-interest debt and if they’re in a position to do so, look at investing,” Ms Benjamin told The New Daily.
“This shock is a great time to re-evaluate and learn to have self-control on treating yourself because this sometimes prevents us from achieving our financial goals.
“So it’s important for people to include calendar notifications for bills on their phone, set up an account system that splits up living expenses from savings, and train your mind to talk positively about your money.”
Tips to building a good savings regimen
- Track how much money is coming in versus going out
- Set up an emergency fund to get an initial $1000 saved (and try to work up to three to six months’ living expenses)
- Organise payslips to be split into separate accounts using the ’50-30-20 rule’ (50 per cent for living expenses, 30 per cent for discretionary spending and 20 per cent for future spending)
- Think creatively to find opportunities to reduce spending (i.e. enjoy dinner at home with friends rather than eating out)
- Set up frequent direct debits instead of lump-sum payments to avoid surprisingly large bills.
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