Financial wellness describes how we evaluate our finances and cope with any related stress. It can be a significant factor that affects our overall psychological wellbeing.

AMP’s recent financial wellness research found three financial habits that people who are financially secure have in common:

1. They save money regularly
2. They pay off their credit card debt
3. They avoid using layby and buy now, pay later (BNPL) services.

We explore each of these in more detail to see how making a few small changes could improve your financial wellness.

Saving money regularly

The good news is that COVID-19 has served as a wake-up call to many Australians to set financial goals and save for a rainy day. Before COVID-19, 61% of financially secure people said they saved money regularly, and, on average, they saved 25% of their gross income per week.

This compared to only 36% of financially stressed people saying they saved money regularly, and those who did save saved less than the financially secure – a rate of 20% of their weekly gross income. At 53% compared to 45%, women were found to be more likely than men to save money regularly, however not for retirement.

Tips for saving

If you’d like to save more money, a good approach is to set a goal that you’re saving for, a target amount and a system for saving.

Some people like to establish a separate savings account to avoid accidentally spending their savings, and it can be useful to set up an automatic direct debit to pay your weekly, fortnightly or monthly savings amount directly into this account.

Avoiding credit card debt

Rates of credit card debt were also found to be lower among the financially secure – before COVID-19. 41% said they paid off their credit card in full each month, compared to 24% of financially stressed people.

Unfortunately, COVID-19 has seen more Australians relying on credit cards with 11% of those whose working hours have been affected by the pandemic using their credit cards to pay for expenses, compared to 3% of people whose working hours haven’t been affected.

Tips for using credit cards

If you use credit cards it’s important to read the fine print to understand the fees, charges and interest that apply, and when they apply, as it won’t help your financial health spending money that you don’t need to. To avoid extra interest charges try to pay off your credit card in full each month, and if you feel your spending is getting out of control you could ask your lender for a lower credit limit.

Avoiding buy now pay later (BNPL) and layby

Another hallmark of the financially secure is living within their means. Almost four times as many financially stressed people use layby or BNPL services – 19% of financially stressed people admit to using them compared to just 5% of financially secure people.

And women are almost twice as likely to utilise these services than men –7% of men say they use BNPL or layby compared to 13% of women.

Tips for using Buy Now Pay Later (BNPL)

As with credit cards, it pays to understand any fees and charges that apply. Before spending, make sure you can afford the repayments, and once you’ve incurred a debt, set reminders to make your repayments by the due date. It can also be helpful to link your BNPL account to your debit card rather than your credit card to ensure you’re making repayments with money you have and not incurring additional credit card interest.

Help to get control of your debts

Check out tips on managing your debts to improve your financial wellness, or you could speak to a financial adviser to create a personalised plan to suit your circumstances.

If you’re struggling with financial stress or having trouble managing your debts, you can talk to a financial counsellor at the National Debt Helpline free of charge by calling 1800 007 007.