Shifting to a cashless society: Managing your finances in a tap-and-go world

Before the COVID-19 pandemic, we were gradually moving towards a cashless society.

Since 2020, even the most cash-loyal among us have embraced contactless payments sooner than anticipated.

From purchasing our morning brew to filling up the car, we swipe that plastic with little consideration for its impact on our bank balances.

To be fair, many retailers are now adopting a ‘cashless only’ policy, but we Australians have a reputation for readily adopting new technologies, and touchless shopping is no exception.

According to the Organisation for Economic Co-operation and Development (OECD), Australian household debt currently sits at approximately 211% of net disposable income. This places us fifth globally, behind Denmark (215%), Netherlands (222%), Switzerland (227%) and Norway (247%).Compared to nations with similar spending habits – the USA (102%) and the UK (148%) – our debt levels are notably higher.

If your debt is creeping towards uncomfortable levels, here are some strategies to help you regain control:

• Clear your entire card balance monthly. It’s an age-old piece of advice, but it’s effective. You know what needs to be done; if your current balance is too high, pay more than the minimum amount. The first step in breaking the credit cycle is to step off it, which leads us to our next point:
• Develop a practical budget to identify your spending patterns and determine how much extra you can allocate to credit card repayments. The government’s Moneysmart website offers a free budget planner to assist you. Alternatively, consult your financial planner to create a debt reduction strategy that works for you.
• Retain your tap-and-go receipts and compare them against your account statement weekly. This is one of the most effective ways to track your spending and identify areas of unnecessary expenditure. It also helps you spot any errors or suspicious transactions.
• Instead of using a credit card for contactless transactions, consider a pre-paid card. Available from banks and other financial institutions – even Australia Post offers one – you load it with your own funds and use it for in-store or online purchases. It functions like a credit card but without the risk of accumulating debt.
• Review your subscriptions, including streaming services, magazines, and memberships. Many renew automatically, and you might only realise when an unexpected – often costly – transaction appears on your card. Take stock of your subscriptions and decide which ones you truly need. For those you no longer require, adjust your subscription settings to prevent automatic renewals. Don’t worry, they’ll notify you when renewal is due in case you change your mind!

We’re undoubtedly living in unprecedented times. Our lives have changed in ways we never imagined, and we Australians, true to form, are adapting to these ‘new norms’.

This adaptability is positive, as long as we maintain control over our finances.