Save now, buy later: Aussies cutting back on costs

Shopping, beauty treatments and buy now, pay later (BNPL) have been given the flick, as Aussies look for ways to stretch their budget further.

A new survey from Compare the Market found more than a third (38 per cent) of Aussies had cut back on clothes and shoe shopping, while a quarter had reeled in spending on beauty treatments (26 per cent) and home improvements (24 per cent).

A further 14 per cent of the 1,003 Aussies surveyed said they had started cutting back on BNPL purchases, such as through Afterpay and Zip, to afford their bills.

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The research comes after tougher regulations were announced for BNPL products, with the services set to be treated as credit products.

Compare the Market’s Chris Ford welcomed the changes and noted Aussies were at risk of racking up debt as the services increased in popularity.

“While some use it to space out payments so they can have a bit of wiggle room to juggle other bills and essential costs, other people might be spending money they simply don’t have,” Ford said.

“There are pitfalls and warnings for Australians who use BNPL, like any credit facility, but there are some helpful tips and strategies to keep on top of the bursting household budget.”

Ford recommended users:

• Pay off all BNPL debt before purchasing a new item

• Only make purchases if they had the money to repay it

• Set up automatic savings transfers for when they get paid

He also urged those struggling with their bills to reach out to their service provider or get in touch with a free financial counsellor for advice.

How is BNPL changing?

BNPL products will be treated as credit products by the end of the year. This means the products will face tougher regulations.

For consumers, the changes mean there will soon be suitability and affordability checks put in place. BNPL providers also won’t be allowed to increase spending limits without the user’s express permission.

Other changes include caps on charges for missed payments, improved hardship processes and better dispute-resolution processes.

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