We all know people who constantly complain about having no money, but they are the first to splurge on all the sales. We want to give them advice, but we don’t dare.

Part of our role when we help people secure a loan is to ask our clients “How much do you spend each month on your living expenses?”

It is not uncommon that the answers they give, after evaluation, are understated.

Can you guess how much the
average Australian household
spends each month?
A whopping $9k!
And that’s ‘after tax’ dollars.

In 2021 the average household spent $108,291, equivalent to $2,083 per week income. Rent and dwelling costs were the largest expense by far, costing the average household $445 per week. Food came in second place ($215), followed by spending on recreation and culture ($211) and insurance and other financial services ($176)¹.

Of course this differs by state, however when our clients estimate an answer of $2-$3,000 per month as an expense amount, we know there is a shock coming to our potential new homeowners.

So how is it that most Australians are unaware of their spending habits?

• Could it be the digital age of swipe and run?
• The overuse of Buy Now Pay Later (BNPL) facilities?
• The fact that not many of us use cash anymore?

It used to be a lot easier to budget when we took cash from the teller. We knew it had to last the week, so we probably had better discretionary spending habits as the cash in our wallet reduced throughout the week.

None of us intentionally plan to sabotage our financial future, however for some of us it can get out of control very quickly. Sabotage maybe a result of emotional buying: stress, guilt, anger, death, separation, anxiety or depression and also reward (I deserve this). The problem magnifies when emotional spending becomes a crutch.

Here are some signs of financial sabotage.

• Using your home as an ATM
  Drawing money out of the offset account as though it’s an unlimited bank account.
• You have stopped saving or have no savings
  When you are living beyond your means or running out of month at the end of your pay − something needs to change.
• Your debt is increasing
  You have multiple credit cards and finding the money to pay them each month is becoming a struggle.
• You only ever pay the minimum debt on your credit cards
  You will never get ahead financially by only paying the minimum payment. These cards are always designed to charge you interest for the longest time ever.
• You don’t know your mortgage interest rate or monthly repayments
  If you are unaware of your interest rate or monthly repayments, you would not be aware that there may be better finance options available to you.
• You are a compulsive buyer, shopaholic, sales sucker
  We all love sales and most of us go through a spending spree at some time in our lives. But purchasing for the sake of purchasing will end you in deep trouble. This can be an addiction and you may need professional help.
• You use Buy Now Pay Later (BNPL) services
  This is the first sign of trouble. Lenders do not look lightly on users of BNPL apps.

Even if you earn a lot of money (especially if you earn a lot of money), you can easily become an unaware victim of financial sabotage and wasteful spending.