Aussie savers bomb out on budgeting and bills

29 June 2015

Findings from ME’s June 2015 Saving Intentions and Behaviours Report

  • 57% of households do not consistently set a budget, and 40% fail to stick to one.
  • Half admit to being stuck in the ‘credit card roundabout’ by not paying off their credit card each month.
  • Fewer of those intending to purchase an investor property expect to reach this savings goal in the next 12 months.

A lack of money discipline is holding back many Australians from realising their financial goals, according to ME’s Saving Intentions and Behaviours Survey, conducted in June 2015 with 1,500 adults nationally.

Around 57% of households do not consistently set a budget, and 40% fail to stick to one.

So why aren’t we following through? ME’s Head of Deposits and Transactional Banking, Nic Emery said the key to getting ahead financially is discipline.

“Track the real costs of your household expenses, set a realistic budget, and commit to every single detail, consistently.

"For some types, this may not come naturally. If you’re one of these, I suggest setting up good processes so you don’t slip up. For instance, setting up automatic transfers is a foolproof way to make sure your savings stay on track and continue to build over the year.”

Tardy repayments a real concern
In addition to budgeting discipline going awry, about half of Australian households reported they were credit card ‘revolvers’, never or only sometimes paying off their debt in full. This has increased by 4 percentage points since the last survey in December 2014.

Furthermore, 20% failed to consistently pay off their household bills on time.

“Real problems start to occur when you get stuck in a roundabout of not paying your credit card or bills on time,” said Emery.

“We strongly advise anyone struggling with credit card debt to address the issue as soon as possible. Consolidating debts through a personal loan is the best way to do this. Once you’re in a position to start saving, consider making automated deposits into a high-interest savings account or term deposit to keep you on track.”

Savings focused on wiping debt
Two out of the top four financial goals Australian households are pursuing in the next 12 months are related to paying off debt – possibly as Australians take advantage of low interest rates. Top savings goals include: 


1. Paying off debts as fast as you can (29%)
2. Paying off a mortgage (28%)
3. Saving for a holiday, car or other major expense than a home (27%)
4. Building up rainy day savings (23%)

Financial wins expected
The goals that are seen as most achievable within the next 12 months are largely administrative, such as setting up a budget or savings plan, and therefore easier to achieve.

Less Australians expect to reach big ticket items in the next 12 months. Of those currently working towards these goals:

  • 6% expect pay off their mortgage.
  • 16% of 30-39 year olds expect to reach their goal of buying a home (compared to 22% overall).
  • 32% expect to reach their goal of buying an investment property (down nine percentages points from 41% in December 2014).
  • 47% expect to reach their goal of investing in their own business.
  • 53% of households expect to reach their goal of saving for a major purchase such as a holiday, or other car (down 9 percentage points from 62% in December 2014).

We’re ‘centsable’ spenders
The survey reveals only eight per cent of Australian households make impulsive decisions on big purchases without the intention to pay it off quickly, with the majority able to defer ‘instant gratification’. Most households chose to pay for their last big-ticket item from existing savings (33%) or using a credit card with the intention to pay for purchase within the interest-free period (31%).

The most popular methods for savings
Australians are using a range of savings strategies. Among those currently saving towards a financial goal:

  • 50% transfer money to a savings account when spare funds are present. 
  • 20% set up an automatic transfer to a savings account.
  • 21% pool money into a savings account, and then transfer an allowance to a transaction account.
  • 12% keep savings in accounts with withdrawal restrictions (i.e. term deposits).
  • 13% add funds to a home loan offset account.

New financial year savings resolutions
Just as with the end of the calendar year, a new financial year means a new beginning, and provides a great opportunity to re-evaluate your past financial choices and set some new goals.

If you are indeed unhappy with how your savings account has turned out this year, here are some resolutions for the new financial year that could turn it around:

# Resolution 1: Track your spending. You can’t save money if you don't know where it’s going.

# Resolution 2: Set a budget with a budget-tracking app. Set short, medium and long-term goals and then come up with an actionable, realistic plan for achieving them with the help of a finance-tracking app or online budgeting tool.

# Resolution 3: Pay off your credit card within the interest-free period and automate bills to be paid off from your credit card or keep a calendar of due dates.

# Resolution 4: Make it automatic. Set a specific percentage of your salary to be automatically deposited into a high-interest online savings account so you’re less inclined to touch it.

# Resolution 5: Get clued up. Improving your financial knowledge is critical to healthy savings habits. There are a tonne of tools out there to help improve your financial decision-making, like ME Bank’s Building Financial Confidence online financial education program (www.mebank.com.au/learning).


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About the survey: Research was commissioned by industry super fund-owned bank ME, based on a survey of 1,500 Australians conducted by DBM Consultants in June 2015.