Low Consumer Confidence Benefits Family Finances

Wilson Luna
Aussies love to shop, right? Well, maybe we do – but current research shows that we’re pretty big on saving at the moment too. Low consumer confidence has already led to reduced spending and increased savings – and with a few simple tips you could save even more!

We all love to shop, right? We’ve got the urge to splurge, the itch to spend and we just can’t keep our money in our pockets. Well … research shows that might not exactly be the case. In fact, many families are cutting back on their spending – retail sales grew a tiny 2 per cent in the year to March 2011, and department stores in particular recorded flat or negative monthly results since January 2010. The prospect of seemingly never-ending increases to the cost of living, coupled with the likelihood of interest rate increases and the new instability in the global marketplace, seems to be creating low consumer confidence – and the upshot of this is that willingness to spend is at a 20-year low.

So, if we’re not heading to the shops, where’s all that money going? Well, spending might be in a slump, but saving is on the increase – the household saving rate has jumped around 7 per cent, reaching a decade-high of 10 per cent. And according to Veda Advantage research, debt reduction is also becoming a major concern for Australians: 61 per cent of people with a credit card intend to reduce their debt by the end of 2011.

The change in trend toward saving and debt reduction might be making some retailers a bit nervous – but this is exactly what Australian families need to do in the current economic climate. Reducing discretionary spending, increasing savings and decreasing credit debt are exactly the right way to go about boosting financial stability. If you’d like to join those Aussies already boosting their savings, or if you’ve already started and would like to know how to save even more, these tips could make a big difference to your money management strategy – and your future.

Pay yourself first
You know how, no matter how hard you try, you never have any money left to put aside for a rainy day? That’s because paying all your bills and saving what’s left is a sure way not to save at all! The trick to securing your savings plan is ‘paying’ yourself first and direct debiting a set amount into a high-interest account each week. That way you can ‘catch’ your money before it disappears – and reduce the amount you spend rather than reducing the amount you save.

Shop smarter
Even if we’re spending less at the shops these days, spending is still necessary but the trick is to only spend what you need to. Shop around for the best saving options available, make good use of loyalty points and get online to make the most of coupon and discount websites as well.

Eliminate credit debt
Debts can really eat into the amount you can save every month – so get rid of them! If you have some savings set aside, have a think about using them to pay your debts down. If this isn’t an option, create a debt payment plan that focuses on making an additional payment on the highest-interest debt to really reduce it fast, then work through the rest of your debts in the same way when the first one is repaid. When it comes to debt management, consolidation is becoming a popular option, but just make sure you’re not creating bigger problems for yourself by getting another credit card! Check the terms and conditions before signing on the dotted line and make sure you don’t use that card for any additional spending!

Reducing your spending and increasing your savings really is the key to achieving long-term wealth – and it’s a great strategy for dealing with the high cost of living and the current uncertain economic climate. To get more great saving ideas, get a copy of Your Family Your Money’s Save $30,000 in 30 Days – this 30 day challenge will take you through new areas to save every day, and you’ll be amazed at how simple changes can really make a difference to the size of your wallet!

Author's Biography

Wilson Luna is an author, wealth adviser and founder of Your Family Your Money. Your Family Your Money’s goal is to simplify traditionally complex financial strategies, demystify financial jargon and debunk common financial myths, becoming every family’s first stop for financial advice, information and inspiration.