Poor decisions costing Aussies thousands
AUSTRALIANS are making poor financial choices when it comes to their nest eggs, home loans, health and credit, despite knowing better options are available, new research has revealed.
The Financial Consciousness Index, launched by Deloitte Access Economics and comparethemarket.com.au, canvassed 3000 people on their financial understanding and found 50 per cent believed they could be on a better wicket for superannuation, mortgage, health insurance and credit cards. This was despite close to a third being aware better deals were in the market and 22 per cent admitting they'd never compared financial products.
Comparethemarket.com.au general manager of banking, Rod Attrill, said people can often feel bombarded by complex information.
"At least half of our adult population is making poor choices across their most-relied on financial products," Mr Attrill said. "This could be because we are overloaded with too much information and aren't taking the time to understand and compare our product options."
But respondents did acknowledge they were accountable for their own situations, with 58 per cent saying a budget or financial plan was the most important factor for meeting financial obligations, while 42 per cent rated investment and savings choices as crucial. Another third believed they should improve their financial understanding.
Those earning below $70,000 a year were the worst affected, with 55 per cent lacking confidence in their superannuation product; 61 per cent believing their choice of mortgage had cost them money and 53 per cent aware they should be on a better credit card deal.
"A good idea is to review household finances at least every 12 months, to make sure we are always getting the best deal," Mr Attrill said.
Using comparison sites, online educational tools and free Federal Government information from sources such as ASIC's Moneysmart website can help empower consumers, according to ME Bank head of external relations Matthew Read.
"Independent comparison sites can help you shop around," Mr Read said. "You can often get a better deal just by telling your existing provider what else is available. Unfortunately, loyalty is often exploited rather than rewarded, so be prepared to shift your business, as that's your best negotiating tool."
Switching financial products or providers can make significant savings, but many Aussies "set and forget" insurance, credit card and loan products, said Finder.com.au spokeswoman Kate Browne. "Even if you just reduce one expense a month, you could pocket thousands in savings over the course of the year," she said.