HOW TO AVOID MONEY TRAPS LIKE BNPL AND WHAT YOU DON’T KNOW…

Author: Vanessa Stoykov
Category: Manage Finances

There has been a lot of press this week around the latest report released by Financial Counselling Australia. The report showed a huge increase in BNPL bad debt, which led to a lot of people seeking financial counseling, compared to this time last year.

It also found that many people had multiple BNPL schemes going and cited that one person had 14 different BNPL accounts going at once, coming out of her account fortnightly.

While there is clearly a much bigger issue, when about 20% of our community is using this type of credit to pay everyday life expenses like medicals and food, there is danger to everyone who lets the ease of BNPL continue to play a part in their lives – buying things that they could not afford at the time, but utilising what used to be known as a lay-by.
illustration with a woman with shopping bags and a man handling her a bigger shopping bag with a checklist and money symbols in the background with the text Buy now pay later in blue on a white background

While the idea is a good one, when used the right way, BNPL services like Afterpay can help you manage cashflow to purchase an essential item in 4 simple payments. But now that there are so many BNPL schemes, not just in fashion, but in food and essentials and thousands of other outlets – with retailers clueing in on big business, it has become a new way for people to access credit that they cannot actually afford.

BNPL schemes sit outside the tight lending criteria required by banks. There is lobbying going on right now at the government level to look into how the approval process is working and how to make it safer for everyone to use.
a young happy couple man and a woman carrying shopping bags and the woman showing to the man something on a blue mobile phone in a blurred shopping area.

But if you enjoy shopping, are currently using BNPL and are looking to Christmas shop, here are some ideas for you to think about before you click spend.

Think about the price of something carefully. Do you really need to spend that much on that person? Can you think of other ways to show how much you care for them, and spend what you can afford this month on gifts?
Is what I am buying memorable and lasting? Will it still matter to me in 5 years? If the answer is no, then chances are you don’t need to buy it.
Are you spending on experiences or items? Research has proven that experiences and time together bring more happiness than material items we buy.
What is your financial plan for you for 2022? Put yourself and your money first and be intentional with how you to plan to invest it.
Learn the art of money timing or cashflow. You can have things you want, if you learn to manage the timing of your payments, without BNPL. It takes a little bit of discipline, and you can download the spreadsheet from the government money site moneysmart.com.au.

Be smart this Christmas with money and make smart money decisions into 2022 – after all, you deserve it.

Until next time,

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Authors

Vanessa Stoykov

Vanessa has been passionate about writing and storytelling since her days of hiding under the doona with her torch to read after bedtime.
Kathy Skantzos

Kathy is a yoga-loving world traveller who also happens to moonlight as a business journalist and writer. She was the finance editor of news.com.au and the Managing Editor of CEO Magazine (Asia) before joining Vanessa and the evo squad.
Shayne Sommer

Shayne is second dan black belt in karate, and a budding romance writer with a difference. Why? Because she writes romance stories that always have a money lesson.
Antoinette Colbran

Specialising in stories for 50+ women, Antoinette draws from her own experiences to help other women avoid the pitfalls and see the benefits of understanding their money situation.
Michael Crooks

Michael Crooks is a more than 20 year writer and documentary maker who has worked with Time Inc and the BBC, who wants to expose the truth from real victims of financial crime to help others avoid their mistakes.
Kim Payne

Kim Payne has spent the past three decades as a speaker, trainer, business coach, and consultant in financial services. She has worked with and transformed hundreds of brilliant, educated, high achievers who are chronically under-living.
Rebecca Pritchard

Rebecca Pritchard is on a mission to help men and women achieve equality when growing a family.
Antony Perring

Ant is a writer, designer and business builder with a love of food, design and good living. He writes on food and money in an easy to do way.
Julie Hyde

Julie Hyde is a leader of leaders. A disruptor and a powerful people enabler who empowers leaders to make big things happen.
Joshua Pennell

As a Dad to four kids and a business owner, Josh is passionate about family and finances and is known as The Family Finance Guy.
Sid Lal

Sid is a serial entrepreneur who set up his first business when he was still in University. Since 2009 he has been heading Bruce Clay, first in India & more recently in Australia.
Lou Johnson

Lou Johnson believes in the power of sharing stories to build empathy, understanding and connection. Growing up surrounded by books and storytelling, alongside her drive to make a difference led her to a highly successful career in book publishing.
David Rae

Dave is a CERTIFIED FINANCIAL PLANNER® professional and has been a financial adviser since 2003. He works with a range of clients and has a strong focus on ethical and sustainable investing.
Natallia Smith

Natallia specializes in assisting pre-retiree single women—whether they are never married, widowed, separated, or divorced—understanding deeply the importance of financial stability during life's pivotal moments such as separation, divorce, retirement, and the loss of a loved one.
Mark Hoy

With over 15 years of experience in financial services, Mark established Wollemi Wealth Management in 2013. His business is built almost entirely on referrals and word of mouth — a testament to the trust, integrity, and long-term relationships he forms with his clients.
Derek Gascoigne

Derek Gascoigne is the State Manager for UniSuper Advice in Victoria and Tasmania. Derek has been with UniSuper for over 15 years, and his career in superannuation and financial services spans 27 years and counting.
Annika Bradley

Annika Bradley is Head of Advice Strategy, Research & Technical at UniSuper. She brings over 20 years of experience across investments and wealth management in both the public and private sectors.
Wayne Leggett

Wayne has been a recipient of numerous industry awards and was one of the first to qualify as a Certified Financial Planner (CFP). He has been heavily involved in industry affairs at the highest level, including serving as national president of the Association of Financial Advisers (now FAAA).
Conrad Francis

Conrad Francis is the Founding Director of Inspired Money, a Perth-based financial coaching and financial planning, mortgage broking and money coaching firm he established in 2011.
Andrew Beks

Andrew Beks is a Chartered Accountant and the founder of Simplified Business and Accounting.