woman with beautiful legs, nude shoes and red skirt carrying multiple paper shopping bags in a shopping location
December 7, 2021

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.

  1. 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?
  2. 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.
  3. Are you spending on experiences or items? Research has proven that experiences and time together bring more happiness than material items we buy.
  4. 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.
  5. 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 into 2022 – after all, you deserve it.

Regards
V

Each day I wake up excited to inspire everyday people to open up and take control of their money, regardless of their history, goals, or savings amount. About Vanessa >>

Book

Discover a new way of seeing
life & money.

Download the first 3 chapters for free

Download

Related Articles

Why I wrote my book

Living an idyllic life on Sydney’s lower North Shore, with a successful business I ran with my husband, two gorgeous little girls, a beautiful home and a beach house, all was blissfully running smoothly, or so I’d thought.  I had always taken a ...

The Socialite and the Sous Chef

Got an appetite for fine dining? An exquisite restaurant that tantalises the taste buds will usually ask us to put our money where our mouth is - read our scenario below as food for thought… “You’re the famous Sous Chef of Excelsior, ...

Don’t Want to Work Longer Because of COVID-19?

Money expert Vanessa Stoykov explains how COVID-19 has affected some Australian's finances for the worst - and shares her top tips on what to do about it. While I have been talking to people for many years about their money, I really wonder...

Should You Take Your Super?

There has been a lot of press around the early release of the super scheme, and the fact that Australians have taken $28 billion out of their retirement savings to use now during the pandemic. Whether or not everyone has used the funds to t...