There’s no denying – we slap down a lot of cash for a tonne of unnecessary shit. The moment Visa dropped their payWave feature, we, as a society, said goodbye to all pre-purchase decision making. $18 on an Aperol Spritz? No fkn worries. $35 for a chicken parmy loaded with all the good stuff? Sign me the heck up for a calorie-induced high well worth the dollar dollars bills, ya’ll.
The mindset of a millennial is that if it makes us feel good, we’ll drop the cash — food, booze and good vibes all included.
But have you ever considered how your spending habits may affect — heaven forbid — your future? There’s heightened conversation at the moment around the lengths that banks are going to monitor how much cash we drop on things like food, entertainment and food deliveries. As a result of the banking royal commissions in recent months, the big four banks are coming in guns blazing and ultimately, your spending habits today could affect your eligibility for loans in the future.
But the increased scrutiny comes from a rather misguided place. Millennials are often labelled as the ‘mindless spenders’ or the ‘over indulgers’ — and, to an extent, we are. We’re not yet burdened by mortgage repayments (most of us anyway), and so we can afford to live a little extra and beyond our means. As a mortgage broker told the ABC, banks are looking at our daily coffee consumption and assuming that we will continue such habits into the future.
“What they aren’t thinking about is that people do live within their means and they do adjust after taking on debt.”
“The banks are assuming what you’re spending now is what you’ll spend for the rest of your life.”
Banks want to monitor your spending habits now to assume what your living expenses will look like in roughly five years time. The issue? Banks are riding off every day debit payments, like coffee or Uber Eats, as living expenses – which they’re not.
“We are having arguments about it every day and many banks are counting debits and calling them living expenses.”
So how do you ensure your over-indulgences today don’t jeopardise your future? Here’s what mortgage brokers recommend:
- Rethink Afterpay-ing unncessary stuff you could probably skip out on buying. Wait for your next pay packet — good things come to those who wait.
- Reduce the limit on any credit cards you have.
- When you do apply for a loan, educate yourself and shop around.
Image Source: Unsplash, Giphy.