How Afterpay is making us poor

Buy Now Pay Later (BNPL) services are making it easier than ever to get into financial trouble. With these types of schemes, Aussies are “knowingly getting themselves into debt – and banks and financial providers are benefitting as a result,” says Tribeca Financial CEO Ryan Watson.

I see this happening a lot with my friends. Just recently, a pal went to Bali. Before she left, she stocked up on swimsuits at Seafolly – to the tune of $480!

“Popped it all on Afterpay,” she laughed, as if it were free. I had to stop myself from replying… “You do realise that you still have to pay for it, though, right?!”


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Just because you can pay it off in instalments, doesn’t make it any more affordable than if you are paying full price with cash.

Rather than use Afterpay, people should try putting aside the cash for 4 fortnights. If they have the money pooled at the end, then they can afford to buy what they covet. If not… keep saving!

Think my philosophy is too harsh? Well, in news that is not really news to anyone, it’s been confirmed that roughly one third (31%) of Aussies confess to having a poor handle on their finances.

The research, released this month by Tribeca Financial, found that men are more likely than women to fail to pay attention to finances, with easy impulse purchases like takeaway food contributing to their debts.

“It’s alarming for people to get into credit debt over insignificant purchases like takeaway food and Uber Eats. The debt mounts up, leading to Aussies managing debt with high-interest rates, which is concerning – and it’s causing financial stress for two in five Australians,” says Watson.

According to their survey, more than half (54%) of respondents identified holiday spending, education costs, updating homewares and furniture and ‘big ticket’
purchases as the biggest culprits for spiralling debt.

Adults surveyed confessed to: not knowing how to budget; using cash advances on credit cards when they run out of money; not paying attention to debt; racking up late fees on credit facilities. The list goes on.

The big issue here is financial education – or lack thereof. Most of us learn how to manage money through trial and error, with an emphasis on the word ‘error’.

Charging this season’s fashion to the credit card or Afterpay is a massive step backwards. But learning to set a budget and live within our means – while saving the likes of Afterpay for true emergencies – is a big step in the right direction.

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