Australians have done an incredible job managing their finances over the last few years.
Despite a series of historic economic hardships, the Reserve Bank of Australia estimates total additional household savings hit A$200 billion in 2021 pushing household wealth to record heights.
A revaluation and diversification of financial tools to help manage spending supported this new approach to money management. That includes the use of Buy Now Pay Later (BNPL) platforms – such as Afterpay – which has skyrocketed in recent years. RFI data shows the proportion of Australians that use BNPL services increased from 32 per cent in March 2021 to 38 per cent in March 2022, reaching just shy of six million active accounts.
Australians are quickly realising the potential of BNPL services to support their financial goals. Take Justin Cutajar, a 33-year-old Sydney-based young professional who uses Afterpay on a regular basis. For Justin, Afterpay provides an opportunity to take more control of his finances.
“Afterpay has been an important tool for me throughout my whole financial journey,” Justin explains. “I first heard about it at a time in my life when I was learning how to budget and be more responsible with my money. It’s been amazing for helping me manage my expenses.”
BNPL services like Afterpay offer a range of key advantages to consumers looking to save money and keep track of spending. Here are three core ways Afterpay helps Justin – and millions of other Australians – build stronger and more resilient finances.
1. It allows you to budget more effectively
One of the core benefits of BNPL is it allows you to spread the cost of purchases over a longer period of time to help manage the cost of expenditures.
“I get paid fortnightly so Afterpay is really useful for budgeting,” Justin says. “Instead of purchasing something upfront with $300 leaving my wallet all at once, I can plan things out to manage my spending more effectively for when I get paid.”
Justin isn’t alone. Data from the Australian Finance Industry Association shows over half (54 per cent) of users say BNPL helps them manage their cashflow, with 49 per cent saying it’s useful for helping them feel in control of their finances.
“The app gives me a clear and concise idea of what I owe and when, with notifications about upcoming payments. If I’m feeling on top of my finances, it’s so easy just to pay an installment early and plan for the rest to come out when I get paid.”
2. It helps avoid high-interest debt
Younger generations increasingly use BNPL as an alternative to credit cards. That includes Justin, who says Afterpay has been a useful tool for driving down his interest payments.
“Afterpay has definitely reduced the amount of interest I pay on my credit cards,” Justin says. “For me, credit cards are for emergencies, as it’s easy to get stuck in an endless cycle of paying it off and accruing interest. With Afterpay, I can buy the things I need without getting penalised.”
More than half of Australians prefer BNPL services over credit cards, because they pay no interest.
That adds up fast, with consumers avoiding $102 million in interest over the course of 2021 by using BNPL instead of a credit card.
3. It provides a safe and secure platform
Afterpay also provides a secure payment platform for customers, with a team of experts working around the clock to ensure consumer confidence. That helps Justin shop online, where it can be difficult to determine the trustworthiness of certain merchants.
“I really enjoy Afterpay as a way to check out online because it feels more secure than popping in card info all of the time,” Justin adds. “It’s generally one of the fastest and most convenient check out options and reassures me that I’m not directly giving out financial details online.”
Planning for a resilient financial future
While Australians’ resilience to save cash over the last few years is an inspirational feat, there are challenges on the horizon. As interest rates continue to rise, many are feeling the brunt to their hip pocket.
Afterpay is one of many tools that can help Australians relieve that pressure, offering savings and budgeting capabilities that can lessen the impact of purchases. That helps people like Justin purchase the things they need, with the confidence it’s not going to break the bank.
