Spending: How do you compare?

Have you ever wondered how your spending habits compare to that of your friends and neighbours?

Not compared to the spendthrifts (where you may come out better) or the frugals (you spend much more), but compared to average Australians?

Now you can find out. The Australian Securities & Investment Commission’s Moneysmart website provides a snapshot of what Australians really spend their money on. The information is further broken down by state and life stage.

Understanding where your money is going is the first step to helping you manage your budget. Seeing how you compare to other average Australians can help you work out where you can make changes to your spending habits.

The average household is estimated to spend $69,166 each year on general household living costs. Living costs include housing costs, utilities, food, clothing, transport, recreation and even your pets. It’s how much you spend to live the way you do.

This translates to an average household spend of about $5,800 each and every month, or $1,330 every week. Interestingly, the 2011 census calculates the median weekly household income as $1,234, which leaves the average person accumulating more debt with each passing week and little chance of paying it down.

These average weekly costs can be broken down further as follows:

• Housing $223
• Transport $193
• Recreation $161
• Household furnishing and equipment $59
• Clothing and footwear $44

These costs total only $680, which leaves on average another $650 spent every week on food and other necessities – as well as life’s little luxuries.

In comparison, housing costs in the 2011 census show that the median monthly mortgage repayments were $1,800 and the median household weekly rent was $285. This means the housing cost on the Moneysmart website must take into account people who have paid off their mortgages, and pushing down the housing costs for an average household.

There are also differences in each state that need to be taken into account, with the highest living costs being in the ACT at $1,536 per week, followed by the Northern Territory at $1,500 per week. South Australia was the least expensive at $1,044 per week.

Weekly spend by life stage

These figures become even more helpful when we are able to compare like for like, depending on how your household is made up.

Source: www.moneysmart.gov.au. Data from www.ibisworld.com.au, Australian Bureau of Statistics Household Expenditure Survey 2009-10

See where you fit and how you stack up against the average household based on your situation. This provides a useful starting point to see where you can start to make some real savings.

Find lost money, the legal way

Have you stashed away some money and then forgotten about it? It’s possible that you could be sitting on a small fortune and not even know it.

There could even be money owed to you from unpaid wages or lost superannuation that you don’t know about. It’s like winning the lottery without buying a ticket.

There’s a whopping $677 million sitting in lost accounts, and more than 1 million people could be sitting on a small windfall.

You could get lucky and have unclaimed money if you:

• haven’t made a transaction on your cheque or savings account for over three years
• stopped making payments on a life insurance policy
• moved without leaving a forwarding address
• have noticed that regular dividend or interest cheques have stopped coming, or
• were the executor of a deceased estate.

Fortunately, the Australian Securities & Investments Commission has made it as easy as possible to look for lost money. Simply visit ASIC’s MoneySmart website at moneysmart.gov.au and start searching.

ASIC can access unclaimed money from bank, credit union or building society accounts, shares and life insurance policies. They say that one of the more common reasons why people lose money is because they change address. In 2011, Australians recovered $56 million using this service.

The rule is that if you don’t claim what is yours, then the government gets to keep it. All the more reason to get searching.

In the past, if you happened to have an inactive bank account or life insurance policy it would be transferred to ASIC after seven years. According to the government, the downfall of this was that your money could be eroded by fees and inflation. This timeframe was recently reduced to three years to ensure that lost bank accounts are better protected from erosion.

Also, from 1 July 2013, interest will be paid on unclaimed money held by ASIC at the rate of CPI inflation, and this interest will be tax-free.

The downfall is that you need to be active with your accounts at least every three years to avoid having them moved to ASIC – where they could earn less than you had planned. You can no longer set your investments and forget about them for a while, then expect to access your money easily on a rainy day.

It’s free to search at www.moneysmart.gov.au/tools-and-resources/find-unclaimed-money. You could even find lost superannuation, lost share dividends or unpaid wages on MoneySmart.

Didn’t get lucky?

The worst that could happen is that you don’t find any lost money. And that isn’t too bad for a few minutes of looking around.

Other ways to find money include:

• Do a budget you may find some spare money
• Reduce your credit card debt and stop paying extra interest charges
• Switch your mortgage to a lower rate
• Save in a high-interest savings account
• Check if you are entitled to any government benefits.