Money squeezed Aussies are looking to sell their stuff to pocket $5800: Gumtree

Money squeezed Aussies are looking to sell their stuff to pocket $5800: Gumtree

Australians feeling the financial squeeze of the coronavirus pandemic are looking to pocket about $5800 in extra cash by selling some of their unwanted stuff, a new report reveals.

People worried about making ends meet are looking to sell more than a dozen of their household items to offset the low-wage growth and growing unemployment exacerbated by COVID-19, Gumtree’s annual ‘second hand economy’ report found.

“Australians are turning to the second hand economy by collecting their pre-loved items and selling them online given the current economic environment,” Mark Kehoe said, managing director of Gumtree Australia.

“(About) 42 per cent of Australians say they are more likely to sell items through the second hand economy now than before COVID-19.”

The report found 63 per cent of people have concerns about paying household expenses -- such as food, utilities and internet bills -- due to the current economic uncertainty, and they’re looking to sell 19 of their items to pocket $5800 in cash.

Turning clutter into paid bills

The money to be made and the number of items to be sold represent an all time high in the decade Gumtree has been compiling the report. It’s about $500 and eight extra items more than the 2019 report found.

Furniture and home decor accounted for a third of the items people wanted to sell. Gumtree said they “sold the quickest and helped Aussies make the most money”.

Others include: 

  • Clothing, shoes and accessories
  • Books
  • Music, DVDs, CDs
  • Electronic goods (including phones and PCs)
  • Home decor/furniture
  • Games and toys
  • Tools/gardening/DIY items

Millennials were the highest group worried about being able to pay for food and bills at 68 per cent. They’re followed by Gen X at 64 per cent, while Baby Boomers were the least concerned at 53 per cent.

Millennials were also the group who traded on the second hand economy most, Gumtree said. From the sale of 90 million items last year, millennials pocketed $9000, Gen X $5600, Gen Z $3700 and Baby Boomers $2000.

Some breathing space

The COVID-19 pandemic has prompted people to reevaluate their budgets and finances. Government subsidies, such as JobKeeper and JobSeeker, have helped slow the rising unemployment rate and keep people on top of their mortgage repayment and bills, but the $550 weekly payment has meant many have had less money to spend.

The fact JobKeeper and JobSeeker are going to taper down from September won’t make it easier for people still looking for work. Selling some unwanted stuff for a quick buck could help build a savings cushion. According to a recent bank survey, about 21 per cent of people had an average of $300 for the proverbial ‘rainy day’ and faced a “savings cliff”.

The Reserve Bank of Australia has tried to hedge the financial pressure by lowering the cash rate to a record low, resulting in mortgage interest rates dropping too. Consequently, banks have lowered the interest rates on savings accounts so that the money in them grows at a slower rate.

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Learn more about savings accounts

Can you have a joint savings account?

Yes. Joint savings accounts can be useful for two or more people wanting to combine their savings to meet shared financial goals, including spouses, flatmates and business partners.

Some joint savings accounts require all parties to sign before they can access the money. While less convenient, this extra security can help encourage all parties to meet their shared financial goals.

Other joint savings accounts allow any of the account holders to access the money. These accounts can be convenient for financially responsible couples that trust one another implicitly. 

How does interest work on savings accounts?

The type of interest savings accounts accrues is called compound interest. Compound interest is interest paid on the initial deposit amount, as well as the accumulated interest on money you have. This is different from simple interest where interest is paid at the end of a specified term. Compound interest allows you to earn interest on interest at a higher frequency. 

Example: John deposits $10,000 into a savings account with an interest rate of 5 per cent that he leaves untouched for 10 years. At the end of the first year he will have $10,512 in savings. After ten years, he will have saved $16,470.

Who has the highest interest rates for savings accounts?

As banks frequently change their rates, the most accurate way to know who currently has the highest interest rate is to use a savings account comparison tool.

Can you set up a savings account online?

Yes. Several large and small banks offer online applications for savings accounts, and there are also online-only financial institutions to consider.

Online-only savings accounts are often less expensive than other savings accounts, though they may not offer the same flexibility, features, or face-to-face service as more traditional savings accounts.

What is a savings account?

A savings account is a type of bank account in which you earn interest on the money you deposit. This makes it one of the easiest and safest investment tools.

What is the interest rate on savings accounts?

As banks frequently change their rates, the most accurate way to look at interest rates on savings accounts is to use a savings accounts comparison tool. When you look at the savings rate check what the maximum and minimum rates are. Often banks will offer you a promotional rate for the first few months which is competitive, but then revert back to a base rate which can sometimes be less than inflation. Ongoing bonus rates are often a safer bet as they will keep rewarding you with the maximum rate, provided you meet their criteria

Should I open a Commonwealth locked savings account?

If you have trouble saving money, a Commbank locked savings account could be a potential solution. A locked savings account won’t let you make withdrawals and as such, it can help you grow your savings balance if you keep topping it up. 

The Commonwealth locked savings account advertises high-interest rates and minimal maintenance fees, along with a host of other incentives that will encourage you not to touch the money. 

The account offers a higher interest rate for each month that you make limited or no withdrawals, as well as regular deposits. 

To qualify for a Commonwealth locked savings account with the advertised features, you will need to fulfil specific criteria such as:

  • Depositing a fixed minimum amount into the account every month.
  • Making a fixed number of deposits each month.
  • Making a minimum or no withdrawals each month.
  • Maintaining a minimum account balance.

How much money should I have in my savings account?

A good rule of thumb when working out a minimum balance for your savings account is to make sure that you’ll earn more in annual interest on your savings than what you’ll be charged in annual fees.

If you’re saving with a specific goal in mind, prepare a budget so the interest you earn on your deposits will help you efficiently reach this goal. Online financial calculators may be helpful here.

Can I overdraft my savings account?

A lot of savings accounts won’t let you overdraw. Some will allow this feature but you’ll need to apply first. It’s best to read the fine print and check with your lender whether this is a feature they offer. It can be a helpful addition, but as your lender can charge you a fee as well as interest for going into negative numbers, it’s best to avoid overdrafting when possible.

How do I open a savings account?

Opening a savings account is a relatively simple process. If you’ve found an account with a suitable interest rate, you’ll just need to get in contact with your chosen lender via a branch, phone call or hop online to begin the process. 

You may be required to provide:

  • Personal details, including identification (driver’s license, passport etc.)
  • Tax file number
  • Employment details

What is a good interest rate for a savings account?

A good rule of thumb to keep in mind with savings accounts is to look for a rate that is higher than the CPI inflation rate. This number is constantly changing, so check the Reserve Bank of Australia’s page. If you aren’t earning interest above this then the value of your money will go backwards over time.

Can you direct deposit to a savings account?

Yes. You can make one off payments or set up regular direct deposits into a savings account. This can be organised easily through online banking or by making deposits in a branch. Talk to your lender to find out the easiest way for you to set up direct deposits.

How to make money with a savings account?

Savings accounts make you money by earning interest on your savings. The more money you deposit, the longer you leave it in the account, and the higher the account’s interest rate, the more interest you’ll be paid by the bank or financial institution, and the more your wealth will grow.

To make sure your savings account makes money and doesn’t lose money, it’s important to maintain a large enough minimum balance that the annual interest earned exceeds any annual fees charged on the account.

How to open a savings account for my child?

Some banks and financial institutions allow parents to open a bank account for their child as soon as it is born, and start depositing funds to go towards the child’s future.

Children’s savings accounts generally don’t have fees, and are structured to help develop positive financial habits by limiting withdrawals, encouraging regular deposits, and earning interest on the savings, similarly to standard savings accounts.