Did you know that the average Australian household spends $20 a week on bakery products, $77 a week on holidays, and $29 on personal care products? These are just a few contributors to the nearly $700bn of general living costs that Australian households face each year. If you didn’t know this you’re not alone, and you probably haven’t considered that your household could be one of many in Australia spending over $300 a year on chocolate!
With costs of living continually rising – particularly in cities such as Sydney -, it’s more important than ever to budget and track where your money goes. Fortunately, cloud and phone-based expense tracker apps are available to help you stay on top of your expenditure. Below is a guide to the most popular budgeting and personal finance tools that Australian’s have adopted.
App #1: Pocketbook – 100% free; used by 350,000+ Australians
Pocketbook boasts over 350,000 Australian users and promises to make it ‘super simple’ to be in control of your money. The app automatically organises your spending into categories like clothes, groceries, and fuel – showing you where money is being spent. Pocketbook’s budgeting feature lets you set ‘Safely Spend’ limits by category and notifies you when are approaching your limit. Pocketbook was named the best Money Management App in 2018 Mozo Experts Choice Awards.
- Connects with all of your bank accounts and automatically syncs all your bank transactions with the app into a single view
- Automatically detects all your bills and notifies you when your bills are coming up and if you have enough money to cover
- Auto-categorisation of transactions enables you to limit your weekly, fortnightly or monthly spend for specific expense categories
App #2: MoneyBrilliant – Enhanced features, but there is a cost
MoneyBrilliant brands itself as a personal financial assistant to help you make better decisions about your money. As with Pocketbook, the app brings all your transactions into one view by connecting with your bank accounts. Like Pocketbook, MoneyBrilliant supports budget creation, bill monitoring and auto-categorises transactions. MoneyBrilliant extends the Pocketbook offering – the app connects with more than just bank accounts, looks for better offs on your bills and assists with tax deductions. However, the extra features are only available for paid users ($9.90/month or $99/year) – though, they do have a free offering with a similar level of features to Pocketbook.
- Connect bank accounts, credit cards, loans, mortgages, superannuation and even loyalty cards so as to view your money in one place on whatever device you choose – your phone, tablet or computer
- Receive spending reports to understand how you spend your money and find opportunities to spend less
- Create a budget based on your historical income and spending – adjust your budgeted income and spending to achieve your goals
- The app will automatically identify possible tax deductible expenses and capture the receipts so that a summary is readily available at the end of the year for your accountant
- Receive better deals on bills, as the app will automatically find the cheapest gas and electricity deals based on your bills and energy usage data
Other solutions to manage your spending
Australian’s are looking beyond typical spend tracking and budgeting tools like the above apps to manage their finances. Over the coming years, two trends should be closely watched in regards to how consumers manage their money.
- The Buy Now, Pay Later phenomenon: Interestingly, Afterpay – the Australian shop now, pay later market darling which has over 16,000 retailers and 2.2m customers live (as of July 2018) -, claims that 77% of its customers use the app as a budgeting tool. Afterpay settles instantly with the retailer and allows customers to make 4 interest-free fortnightly repayments. The company claims its service encourages debit (over credit) and thus encourages responsible spending. However, some people may find it burdensome and stressful to budget for multiple Afterpay repayments along with existing expenditures -, but since 67% of the Company’s customer base is Millenials, is this a look into the future of how consumers will budget? Until Afterpay can make significant inroads with older age groups, it’s hard to imagine so. Watch this space as Afterpay expands into the US and the UK
- “Neobanks” – a change in the banking regime: A “neobank” is a bank that is 100% digital and mobile-based – they have existed in the UK FinTech scene for some time, but only recently popped-up in Australia in the wake of changing regulation. A Company to watch is Xinja, founded by former NAB executive Eric Wilson. The neobank (that has only partially-launched) replaces a traditional banks, quote ”boring and sometimes indecipherable ledger”, with assistance in the form of ongoing adjustment and encouragement of everyday habits and behaviours for a long term outcome. Xinja’s app will help you know where you are at with your money, track your spend, stash for specific things, pay less interest or earn more, and never miss a bill. Watch the challenger/”neobanks” space as changes to the banking regulation is rolled out.
Spending habits have changed and so should the way you think about managing your money
Over the past three decades, the proportion of Australian households’ weekly spending on basic goods and services (e.g. housing, food, fuel and power, medical and healthcare) versus discretionary has increased by nearly 10%. Over a similar period, Australian’s have been putting away less of their disposable income into savings (national savings ratio around 10%, down from 20% three decades ago). With this in mind, it’s essential to plan, budget and analysis your spending so that you can start saving for your goals, such as your next holiday or buying a property. The apps mentioned, Pocketbook and MoneyBrilliant, offer a convenient way for you to get on top of where your money is going. Expect to see the offering of money tracking tools increase in Australia with the increased prevalence of technology like Artificial Intelligence and the possible entrance of global players, such as Mint. At the same time, keep an eye out for alternatives such as Buy Now, Pay Later and Neobanks.
How will you plan for your future?
This is the first step to help you manage your day-to-day expenses. A D Danieli Chartered Accountants can help you take the next step, which is planning for your future and long-term needs. Our team can help you plan for your future through our superannuation services, wealth management services, mortgage brokering or financial planning services. Contact us to set up an appointment.
A D Danieli Chartered Accountants
- ABS Household Expenditure Survey, Australia 2015-16. Available here
- ASIC’s MoneySmart Australian Spending Habits. Available here
- Mozo 2018 Experts Choice Awards. Available here
- Afterpay Touch 1H18 Results Presentation available here and Q4 business update available here
- Aussie – How much does the average Aussie spend and how do you compare? Available here