Help, I Think I Have a Serious Spending Problem: What Should I Do?
Chances are after going on a spending spree (maybe even the day after you’ve received your long-awaited pay cheque), you’ve thought to yourself: "Help, I think I have a serious spending problem." And yet despite your bank account sitting in deficit for most of the month, forgoing your avo-on-toast brunch followed closely by afternoon cocktails seems like an impossible ask. I too, have found myself in that position more than I would like, and according to UBank’s CEO, Lee Hatton, this is because millennials are part of the "experience economy", taking out of their savings accounts to have this desired experience regardless if they’ve met their saving objectives for the month or not. So, for those of you (like me) who are looking to be more mindful with your cash flow, we asked Hatton for some key habits she sees millennials suffer from, and her suggestions to tackle it.
But while a green juice and regular exercise is a form of wellness, Hatton suggests that balance should also be found in your financial health. For an easily understandable rundown of why saving seems so hard for us, and what to do about it, read on for Hatton’s advice—I mean, she is the CEO of a bank after all…
What are some of the worst finance habits millennials have?
It really comes down to financial literacy and knowing the important financial numbers in your life, whether that’s how much debt you owe, your credit card interest rate or regular expenses like bills. Our research found that a large portion of millennials don’t know these key figures and a result, 83 percent don’t feel in control of their finances, while 65 percent state their current financial situation causes them stress or loss of sleep. Being in control of your finances is an important part of maintaining a balanced lifestyle, and unfortunately too many millennials are experiencing the effects of not understanding their finances.
What are some spending issues we are seeing young people face that the generation before didn’t?
The biggest thing we see is a behaviour called 'double dipping'. Although many millennials have the best intentions and have a savings goal they are working towards, they find themselves dipping into savings every month regardless. While this isn’t a new behaviour, payment technologies like ‘tap and go’ make it easier to spend, harder to monitor and stay on top of simple financial tasks like budgeting.
Do you think our generation spends more mindlessly than others?
When it comes to millennials, it’s not necessarily spending mindlessly but instead, a shift in priorities and what people want to save for. Millennials are still saving for big-ticket items, but unlike other generations, savings are contributed towards experiences, a term coined in research as the ‘experience economy’. We’re seeing the generation of people born between 1980 and 2000 saving for ‘seeing things’, like holidays rather than ‘having things’, like cars or houses.
What do you think the first thing those in debt need to do in order to make positive changes.
The first step to making positive change and getting in control of your finances starts with setting a budget and sticking to it. Financial management tools and budgeting apps are a great way to get on top of your money. UBank recently launched Free2Spend—a new in-app budgeting tool that looks forward and backwards to put your finances on autopilot. Think about a mapping application like Google Maps—you enter your destination, it tells you how to get there and updates along the way if you take a wrong turn or decide to take a different route.
For more practical money-saving tips, read The Barefoot Investor ($23) by Scott Pape.