Tap and go or tap and gone?
Tap, paid for the coffee. Tap, paid for the groceries. Tap, paid for the shoes. Tap, paid for lunch. It’s almost mindless. Without having to insert and type in your pin code, it’s almost like the purchase didn’t even happen, right? That is, until you look at your bank statements and see how all the under $100 tap and go payments add up. Bigtime.
Recent research from the Reserve Bank Australia has found the declining use of cash is negatively impacting our savings, so if you’re finding your little tap and go payments are leaving you with hardly any money left to save at the end of the week, you’re not alone.
AMP Bank’s Director of Retail Solutions Michael Christofides says paying with tap and go cards over cash is convenient, quick and easy, particularly when compared to rummaging around in your pockets for the right cash.
“But, paying on card can create a disconnect between the consumer and the amount they are spending,” says Michael. “With cash, you know exactly what you are spending and when. You can see your money depleting. With card, you only notice what you are spending when you check your account online or your mobile app.”
Although cashless spending can negatively impact your savings Michael believes by splitting your finances into three buckets, you can ensure you’re budgeting correctly. Set aside money for bills, savings and spending money. Here are a few more tips from Michael to help you save.
6 tips to better manage your virtual currency
- Set some goals
Think about what you want to achieve. Is it to save for something special, to curb your spending or to reduce your debts? Once you know what you’re aiming for you can set and achieve your goals.
- Understand where your money goes
If you’re running out of money before payday, or you’d just like to get a better understanding of where your money goes, it’s probably a good idea to start tracking your spending. There are lots of good tools and apps to do this.
- Set a budget
Get serious about managing your budget. If you don’t already have a budget, now’s a good time to set one. Use a budget calculator to work out your expenditure and find out how much you could put aside each payday.
- Consolidate your debt
Now might be the time to get rid of extra credit cards and opt for a single card with a lower interest rate and less fees. See Canstar for a comparison of credit cards.
If you have a home loan, consider increasing your loan amount and using the extra money to pay off your other debts. A home loan usually has a lower interest rate than debts such as credit cards, so this will help you to avoid paying higher interest rates.
- See where you can make saving
Make sure you get the best rates available on your frequent bills such as insurance and energy. Use comparison websites, such as comparethemarket.com.au to compare product benefits and costs and check Canstar to see how your interest rates and financial products stack up.
- Leverage technology for better saving habits
There are accounts that automatically allocate funds to different ‘buckets’, enabling consumers closer control over how they spend their money. While technology may have made it easier to spend, there are new technologies coming to market helping consumers save.