Ignoring your petrol light? 25% of Aussie drivers are - and it’s a red flag for bad money habits, ME study finds
Friday 25 October 2019
Chances are we all know someone who keeps driving around despite a near-empty tank, or only fills up petrol to the halfway mark. New research from ME Bank reveals that these bad fuel habits are a sign of bad money management - and 1 in 4 Aussie drivers are guilty of them.
ME’s survey of 1,000 Aussie drivers, released today, found that respondents with bad fuel habits were less likely to show positive financial traits. Only 62% said they thought long-term about their finances (compared to 80% of those with good fuel habits). Meanwhile, 55% said they paid off their credit card debt in full every month (compared to 76%) while an even fewer number said they had a rainy day fund for emergencies (47% compared to 69%).
And this sort of mindset is putting a strain on their relationship with money - Aussies with bad fuel habits also reported lower financial comfort than their counterparts.
As for why some people fall into bad fuel habits, ME’s survey shows that your income probably has nothing to do with it. In fact, respondents earning over $150,000 per year were just as likely to display those habits as people earning less than $50,000 annually.
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According to ME money expert, Matthew Read, bad fuel habits could indicate that you aren’t thinking big picture when it comes to your finances.
“If you’re someone who throws caution to the wind, ignoring your fuel light until it’s almost too late, there’s a pretty strong chance this type of behaviour extends to other parts of your life, including your money management. And the results confirm this,” he said.
“Like poor money management, bad fuel habits can be categorised as behaviour with short-term benefits, and relates to sense of control and organisation. In the long-run this type of behaviour can increase overall effort, stress and in some cases may end up costing you more.”
But Read added that it’s not all doom and gloom: “The good news is you can change your habits; with a bit of hard work and persistence it’s possible. If changing your behaviour can positively influence your financial comfort then it’s worth a shot.”
Top tips for getting into good money habits
To change your money habits for the better, it’s important to look long-term and shop around where possible. While no one can predict the future, you can still be prepared for it by doing things like:
1. Creating a budget (and sticking to it!)
The trick to committing to your budget is to make it realistic! If you’re not sure how to get started, you could try out the ‘50/20/30’ rule, where 50% of your income goes to essential spending (e.g. rent, power bills, transport, utilities, debt repayments), 20% into savings, and 30% into fun (e.g. eating out, shopping, hobbies).
2. Cutting down on household costs
Cutting down on household costs: Remember that there are many ways you could reduce your expenses! On the one hand, it’s small things like cancelling the gym membership you never use or giving up on takeaway coffee. But on the other hand, it’s about revisiting your energy plan, home insurance and car insurance to make sure you’ve got your hands on the best deal for you.
3. Building an emergency savings stash
Life happens, and things could go terribly wrong. That’s why having a ‘rainy day’ fund is so important, as it gives you peace of mind that you’ll have enough money to fall back on in a financial emergency. Ideally, this cash stash should cover your expenses for 3 months. It’s also a good idea to set up a dedicated high interest savings account - that way, you can earn heaps of interest and also resist any temptation of ‘accidentally’ dipping into the fund.
4. Prioritising and paying off debt
According to MoneySmart, if you only make minimum credit card repayments every month, it could take you 31 years to pay off a $4,400 balance and cost you about $14,900 in interest. Having a debt strategy in place means you can pay off that debt on your own terms, without getting trapped. For instance, you could prioritise your debt according to interest rates, starting with the biggest killers (usually credit cards).
Or if you have multiple credit cards, taking out a debt consolidation loan could free you from your debt sooner, as it combines all your debt in one place so that you can manage your repayments more easily and save on interest.
Looking to hop onto a better credit card deal? Be sure to head over to our credit cards comparison table to compare your options today.