How 'invisible money' could be killing your budget


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Netflix charges, online shopping and recurring direct debits are draining the bank accounts of young Aussies, who are losing the battle against "invisible money".

"Invisible money powers the sharing economy - it's the money that third-party providers extract from our phone apps when we order our food, wine and taxis through smartphones," says Keith Brown, general manager of product, scheme and business services at BPAY.

Hooking up credit cards and direct debits to apps is making it harder for young people to keep on top of their finances, he says.

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"Because no physical money or cards actually change hands, paying for something instantly through an app is an incredibly easy way to lose track of your finances."

This, coupled with the sharing economy and the outsourcing of work, means "we are witnessing a new frontier in how young Australians relate to money and bills".

Brown says the same technology that has contributed to the problem can help resolve it:

  • Use your smartphone folders, segment the apps that are hooked to your credit card and understand the impact of each through assessing its necessity.
  • Get a system that enables you to view all of your bills in one place, such as your bank app. This holistic view will make bill paying an easier task.
  • Concentrate on understanding the tangibility of each transaction. Paying for items through apps make it seem as if no money is actually changing hands - this mindset will quickly get young people into debt.
  • Adopt debit cards, or make payments from transaction accounts instead of credit cards, to combat the temptation to spend money you don't have.

Millennials are the demographic most likely to make regrettable financial decisions, according to recent research from SocietyOne.

More than 60% of millennial credit card holders have mismanaged their money, and 48% don't pay off their balance every month.

Research from BPAY Group shows millennials are the cohort most likely to experience financial stress, with four out of five saying they often get caught out by unexpected bills or recurring payments. This is more than triple the amount of any other age group.

"Invisible money isn't going anywhere any time soon," says Brown, "and it's up to banks and credit unions to educate their younger customers on how to manage their money and debts with their apps."

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