2020 may have hit our economy hard, but it’s also taught millions of Aussies financial lessons, according to new research from ING.
ING Research shows that around 2.9 million Australians have reported feeling more financially prepared than ever for 2021, with many prioritising “financially fit” goals over romantic ones for the new year.
Over a third of Aussies (36 per cent) said being financially fitter was their biggest priority for the year, followed by overcoming debt (32 per cent). Interestingly, personal finance appears to be more important than finding love, with only 11 per cent claiming this as their biggest priority.
The impacts of COVID-19 on the Australian economy saw a rise in unemployment across the nation, as millions of homeowners were allowed to pause mortgage repayments and credit card repayments due to financial hardship.
It therefore may not be surprising that the financial stress caused by COVID-19 could have forced Aussie singles to prioritise money over love.
Aussies setting better financial habits thanks to 2020
Key findings from the ING research include:
- A quarter (25 per cent) of Aussies claimed to have become more financially literate over the last 12 months, and 70 per cent believe they’re prepared financially for 2021.
- One in three (34 per cent) Aussies have less debt (excluding mortgages) than 12 months ago.
- Two thirds (68 per cent) of Aussies now feel more comfortable talking about their personal debt, with millennials (76 per cent) reportedly the “most open” generation to discuss this previously taboo topic.
- Aussies are reporting new financial habits, with over half reducing unnecessary spending (52 per cent).
These findings are in line with the latest data that shows Australians are creating better financial habits.
The Reserve Bank of Australia reported falling debt-accruing-interest on credit cards across the country for most of 2020 (outside of the pre-Christmas period). Further, Australians managed to squirrel away over $100 billion in deposits since COVID-19 hit (March – November 2020).
Fiona Prater, ING’s Head of Consumer Lending, said: “What this research suggests is that the pandemic has made many Aussies take the positive step to re-evaluate their financial position, making them more prepared for any future financial uncertainty.
“In fact, a quarter of respondents say that over the past 12 months they have become more financially literate and understand their personal finances better,” said Ms Prater.
How to set healthy financial habits for 2021
Whether your new financial habits are out of survival due to financial struggles in 2020, or you’ve been shaken by what has happened to others and want to improve your finances, there are a few healthy habits anyone can pick up in 2021.
- Make a budget and stick to it. It’s not hard to make grand claims about how you’ll divvy up your income each month, but actually sticking to a budget is another story. If you find your expenses are growing each month, consider using app-based budgeting tools that can help label your purchases and encourage you to stay on track. Or, if you struggle with not dipping into your savings, consider switching to a conditional savings account that will penalise you for doing so. This may help incentivise you to stop.
- Get on top of your credit card debt. Make 2021 the year you finally begin chipping away at that pesky credit card debt. Make more than the minimum repayments and consider allocating more of your budget to paying down your balance in full once and for all. If you need a little breathing room away from interest charges, consider if a balance transfer offer may suit you.
- Regularly compare ongoing expenses. Not sure if your current utility provider or phone carrier is still offering you the best deal for your finances in 2021? It’s time to shop around and compare your options. Many providers change their plans and their prices frequently, with more affordable deals typically offered to new customers. Look around and see if you can nab a better deal and keep your bills down in 2021.
- Regularly compare your insurance cover. It’s not just your phone plan that could be costing you more in 2021. If you have home and contents, car or even health insurance, consider comparing a few different insurance offers to ensure you’re still getting the best deal for your personal and financial situation.