New Heritage consumer behaviour study shows Australians are shopping around more, but could still save $7.4 billion
Australia is a nation of “tightarses”, with new research identifying three-quarters (76%) of Australians as tightwads who limit their spending and hunt out the best deals1.
While more than half (55%) of Australians ditched their current service provider for a cheaper deal, research revealed Australians are wasting an estimated $7.4 billion a year by focusing saving on minor purchases, such as their weekly shop, rather than major life purchases, such as a home loan.
The nationwide research conducted by University of Technology Sydney (UTS) on behalf of Heritage Bank explored the spending and saving habits of Australians across a variety of service providers.
The research revealed Australians crave the instant gratification they get from saving a few dollars on food and fashion, but are ignoring the potential to save thousands by doing the same on major purchases - because they are too lazy.
Jetsetting Aussies were most concerned about getting the best bang for their buck on travel (95%) with fashion (93%) and food (90%) also placing high on the list of priorities.
More than two-thirds (67%) of Australians recognised the importance of getting the best deal on their home loan to save money. However, Australia’s ‘YOLO’ mentality and preoccupation with saving money on their interests and experiences, meant this fell to bottom of the list in real life, with only a third of people actually making a switch.
University of Technology Sydney researcher, Dr Eugene Chan, said by obsessing over short-term savings on minor purchases such as fashion, food and travel, Australians had lost sight of the bigger picture and significant savings to be made from making the switch on major life purchases.
“We’re definitely seeing a trend in Aussies wanting to be more savvy with their finances, however, Australians are more concerned about saving money on purchases that bring them ‘instant gratification’,” Dr Chan said.
“What is interesting to see is that tightwads, who are typically very rational in their spending,are looking to make savings on the things they connect with emotionally, like clothing and travel, over major life purchases such as a home loan.
“The attitude of many Australians today to ‘live in the now’ is also reflected in the belief that switching on major investments is confusing, time-consuming and not worth the effort.”
Simplicity impacted the switching habits of Australians, with respondents considering home loans the hardest category to compare.
The report revealed almost a third of Australians think switching home loans is too much trouble, making it the primary barrier to finding the best deal. A further 28% considered the cost of switching not worth the time and effort.
Savvy switchers who did take the plunge and switched their home loan provider reaped the benefits, saving up to $3,000 per year, with an estimated saving of $717,966,7502 per year collectively.
Contrary to the perceived cost of switching not being worth the time and effort, the report showed $3 billion has been saved by people who have switched providers, including home loan, credit card and energy suppliers.
Heritage Bank General Manager Marketing Jane Calder said, “More Aussies are moving away from carefree spending to thinking about how they can save.
“However, as the research shows, those ‘penny pinching’ in the wrong areas could actually be losing out on savings, jeopardising their long-term financial security as a result.
“It’s surprising to see that much of the nation believe switching will cost them money when in reality they could be saving significant amounts to put towards the things they enjoy most in life!
“With confusion also a major barrier to switching, we have made the process as easy as possible with a simple online application form and will continue to improve our products to offer customers the best possible deal.”
NOTES TO EDITORS
For more information on how to make the switch and save on your home loan or credit card, head to heritage.com.au/switch.
1 Refers to Percentage of respondents who identified themselves as tightwads using a methodology designed by Rick, Cryder, and Loewenstein 2008
2 Savings from switching: Home loans: $750 x 957289 (30% of households in Australia with home loans whoswitched) = $717,966,750
The report was conducted by University of Technology Sydney on behalf of Heritage Bank on a sample of around 1000 Australians across the country in October 2016.