The Smart Consumer Test- Personal Finance 2025

budgeting, personal finance, saving, spending

Saving for the future

Ability to regularly set aside a part of your income, so it is available in the future or in case of an emergency.

Saving on purchase

-Getting a good deal when making a purchase

- Spending wisely

How personality can play a large part in saving for the future

A personality can play a large part in how much money a person saves, a person's age and circumstance will also affect their savings ability and spending patterns.

Savings accounts

There are many types of savings accounts available from banks and other financial institutions.

Basic bank accounts

- No or very low fees

- No minimum deposit withdrawal amounts

Online Savings Accounts

-No or very low fees

- May offer slightly higher interest

- May offer rewards for no withdrawal within a certain period of time

- May require minimum deposit

Higher Interest Accounts

- A minimum balance required

- May limit the number of withdrawals

Child or student savings accounts

-No fees

-Potentially higher interest but not always

Shop around for the best deal

There are many sales where prices are reduced on items, if you compare prices when items are on sale, you can save a lot of money. Do your research and take hidden costs into account like travel.

Avoid impulse buying

Self-discipline is needed to ensure you don't buy things that you can't afford or won't use.

Ask of the best price

You can buy a product for less just by asking whether the retailer can give you a better price or ask for a price match.

Assess quality against price

Sometimes, spending a little more for a longer-last product can avoid false economy.

Take advantage of loyalty programs & cards

Take advantage of programs that offer you discounts or free products when you spend a certain amount.

Make a shopping list and stick to it

Overcome the temptation of buying things that you do not require and stick to the shopping list.

Buy in bulk

Sometimes you can get a reduced price per item, if you buy in bulk.

Buy generic products

Buying a cheaper generic good instead of a more expensive brand alternative.

Shop at factory outlets

Factory outlets offer products at reduced prices often because the item is discontinues or has a slight fault.

Get the best mobile phone plan

Get the mobile plan that best suits your calling patterns.

Monitor your ''in-app'' purchasing

It can be easy to lose track of how much money you spend in these types of environments.

Sign up for notifications about sales

Many businesses offer sales using your social media account such as Facebook and Twitter or an email adress.

Budgeting

A budget is a detailed financial plan for future savings and spending.

Being financially literate

You make well-informed decisions about how you use and manage your money.

4 main strategies to manage your personal finance effectively

1. Maximise potential income

2. Understand financial information and take control of financial decisions

3. Keep in control of debt

4. Maintain good financial records

Maximise Potential Income

-Doing additional work hours or extra jobs

- Additional responsibilities or a promotion

Understand financial information and take control of financial decisions

-Weighing up big purchases

- Do not buy on impulse

- Keep track of your spending

- Shop around for the best deal

Keep in control of debt

-If money is borrowed, it must be repaid

- Interest must be repaid

- Find the most appropriate type of loan

Maintain good financial records

- Keep all documents and receipts

- Have a well organised system and check important documents against your own records

Why should you budget?

-It helps sort out your needs vs wants

- Achieve your financial/saving goals

- Find a balance between saving and spending

- Provides control over your finances

Importance of preparing a budget

- Lists receipts/payments

- Budget surplus/deficit

Receipts

The amount of money you expect to collect for a given period of time.

Payments

The amount of money that you expect to spend for a given period of time.

Budget Surplus

When income is more than expenses

Budget Deficit

When expenses are more than income

Setting a goal or target

- Be realistic

-Setting long term and short term goals

Formula for weekly to monthly

WEEKLYx52/12 months

Formula for fortnightly to monthly

FORTNIGHTLYx26/12 months

Consequences of being a poor budgeter

- Being in debt

- Not having enough money to pay bills

- Stress

- High interest charges

- Bad credit rating

Consumer rights

-Consumers have legal entitlements

- Businesses have reponsibilites

- Protest fairness in transactions

UN Guidelines for consumer protection

- Right to choose

- Right to be informed

- Protection against dangerous products

- Right to education

- Right to basic needs

- Healthy environment

- Right to be heard

- Right to settle disputes

Example of UN guidelines

Warning labels on cigarettes protect health rights

Australian Consumers Accosiation (ACA)

Publishes choice magazine and acts as a consumer voice in media and politics

Example of ACA

Public campaigns against unfair bank fees.

Warranties

Written promise that a product is free from faults and covers repair/replacement if item fails withing a period, it doesn't cover normal wear/tear or misuse.

Product Standards

Governed by the Fair Trading Act 1994, ensure products are safe if used correctly. It is the company's responsibility to inform the consumers on a recall.

Example of Product Standards

Wordwide recall of faulty airbags (2017-2018)

Cooling-off periods

Set period where consumers can cancel contracts. Protects against high-pressure selling (door to door, cars, houses). The moment you start using their services or products, the cooling-off period is over, when purchasing an item, always read the fine print.

Cooling- off period example

10-day cooling-off period for door-to-door sales in Victoria.

Refund and Exchange

Consumers are entitled to refund/exchange if product is:

1. Faulty

2. Not as described

3. Not fit for purpose

Limitations on refunds

Not entitled to refund if:

1. Simply change of mind

2. Item misused

Note: Many stores (Target, Kmart) go beyond minimum law to attract customers

The three Rs of returning something

Repair, Replace, Refund

Three places to go to return something

1. Retailer

if they say no

2. Manufacturer

if they say no

3. Ombadsman

if they say no

4. Consumers Affairs Victoria

Ombadsman Services

Independant official resolving complains in industries

Example of Ombadsman

Telecommunication Industry Ombadsman (TIO)

Consumers Affairs VIctoria

Provides advice and enforcement of rights, helps consumers lodge complaints if retailers don't comply.

Eg. Lodging a complaint against faulty work