Do you ever check your bank balance at the end of the month and wonder, “where did all my money go?” Even if you’re earning a decent income and doing your best to stay on top of your finances, it can sometimes feel like you’re running hard without getting very far.

Of course, there are things outside our control, and inflation, interest rates and global events can all put their thumb on the scale in ways that can be difficult to counteract. But sometimes the culprits are those small behaviours of our own that we give very little thought to.

Left unchecked, these can slow your progress towards goals like paying off debt or buying a home, and gradually undermine your long-term security. Here are some common money habits that may be holding you back.

Lifestyle inflation

Received a pay rise recently? Few would fault you for wanting to celebrate, but you’ll need to be careful that higher income isn’t completely erased by needlessly high spending.

Often that takes the form of upgrades to cars or tech, which can be wasteful if your current model still serves its purpose perfectly well. Before upgrading, ask yourself whether the purchase meets a genuine need or just satisfies a temporary desire for something new.

And while you should be able to enjoy the rewards of your hard work, try to direct at least part of each pay rise towards savings, investments or debt reduction. That way your income and your financial progress aren’t moving in opposite directions over time.

Excessive cash holdings

Having a cash buffer is an important part of any financial plan, but if you’re holding excessively large amounts of cash without a clear purpose, you might be missing out on opportunities elsewhere.

That’s because while cash can provide security and easy access, it typically delivers lower returns than other growth assets. And if inflation is tracking higher than your bank’s interest rate, your money’s purchasing power is essentially declining.

So if you have an emergency fund in place and enough cash on hand to cover your short-term needs, investing any surplus could give your money a better chance to grow and outpace inflation.

Only making minimum repayments

Making the minimum repayment on your credit card might keep your lender out of your hair, but it’s worth remembering that it’s designed to cover only a small portion of what you owe. Your remaining balance continues to accrue interest, meaning you could end up paying significantly more over time.

If you can, aim to pay off your credit card balance in full each month. And if that’s not realistic at the moment, paying even a little more than the minimum can still reduce the interest you pay and help you become debt-free sooner.

BNPL when used irresponsibly

Buy Now, Pay Later services can be convenient when managed sensibly; the challenge is that splitting purchases into smaller instalments often makes it feel like you’re spending less than you actually are. Tack on another BNPL purchase, and another, and it can get quite hard to stay on top of your other financial priorities.

So before turning to BNPL, make an effort to understand what you currently owe and how adding another commitment might impact your cash flow. You might be better off saving up and making the purchase with cash, or even giving it a miss altogether.

Subscription creep

Streaming services, fitness apps, cloud storage and software subscriptions can seem fairly inexpensive on their own, but the combined cost can amount to hundreds or even thousands of dollars each year.

Try to conduct a periodic review of your subscriptions and see if there are any you’re willing to say goodbye to. If you haven’t been keeping track of them (or regularly checking your bank transactions), you might find you’re paying for services you had completely forgotten about, so your cull might not even affect your lifestyle too much.

Status (or social media-driven) spending

You’ve probably felt that twinge of envy when scrolling through your social media feed. While this is normal, what matters is how you let it affect you. If constant exposure to images of luxury holidays, renovated homes and designer products stirs up feelings of inadequacy and the first remedy you reach for is online shopping, it might be worth limiting your social media usage.

You don’t necessarily need to delete your social media accounts, but it might be worth unfollowing pages that leave you feeling like you’re falling behind or even setting daily screen time limits.

Impulse buying

Spontaneous purchases, emotional spending after a stressful day, signing up for deals without fully considering the long-term cost, and panic-selling during a market downturn – these are all examples of impulsivity at work.

The challenge is that short-term decisions can have long-term consequences. To help rein in your impulsivity, try setting up small barriers, like waiting 24 hours before making a purchase or changing your internet browser settings so your payment details don’t automatically fill in at checkout.

In the end, building wealth rarely comes down to a single decision. Rather, it’s shaped by the choices you make consistently over time. That means embracing habits that move you closer to your goals just as much as avoiding the ones that hold you back.

When interest rates drop, it often sparks excitement, as people start thinking about lower repayments, cheaper loans, and extra cash flow. While it’s tempting to pocket the savings and treat yourself, a drop in interest rates presents an incredible opportunity to make smarter financial decisions that can set you up for the future.

Interest rates are a key lever in the economy, and changes impact everything from your mortgage to your savings. If you play your cards right during a period of low rates, you can turn this into a financial win that pays off in the long term. Here’s how to be smart and get ahead.

Don’t change your repayments 

If you’re paying off a mortgage, keeping your repayments at the same level when rates drop is one of the smartest moves you can make. Why? Because every extra dollar you pay above your minimum repayment goes directly toward reducing the principal amount. This reduces the overall interest you’ll pay in the long term and helps you pay off your loan faster.

For example, if your home loan interest rate drops from 6% to 5%, calculate your new minimum repayment but continue paying the old amount. That difference, which you were already used to paying, will work harder for you by chipping away at your debt.

Build an emergency fund

Lower interest rates often mean lower returns on savings accounts, but this doesn’t mean saving becomes any less important. Use the extra cash flow from lower loan repayments or other expenses to bolster your emergency fund.

Aim to have three to six months’ worth of living expenses set aside in case of unexpected events like job loss or health issues. If you don’t already have an emergency fund, now is the perfect time to start. A high-interest online savings account or offset account linked to your mortgage are good options to consider.

Reassess your debts

A drop in interest rates is the perfect time to review all your debts and see where you can save even more money. Look at credit cards, personal loans, or car loans. If the rates on these debts haven’t decreased in line with broader rate cuts, it may be worth shopping around for a better deal.

Debt consolidation can also be a smart move. By rolling high-interest debts into a single, lower-interest loan, you can save on interest payments and streamline your finances.

Invest strategically

Low interest rates can be a double-edged sword for savers. On one hand, borrowing becomes cheaper, but on the other, returns on cash and term deposits may decline. This is a good time to think strategically about investing.

If you’re new to investing, start with small amounts and diversify your portfolio. Low-cost exchange-traded funds (ETFs) or superannuation contributions can offer good growth potential over time. Remember, investing comes with risks, so make sure you’re comfortable with your risk tolerance and do your research or seek financial advice.

Consider refinancing

With lower rates, refinancing your mortgage or loans can lead to significant savings. Lenders often compete aggressively for new customers when rates drop, so you may find an attractive offer with lower fees or a better interest rate. Before refinancing, check for any exit fees on your current loan and calculate whether the savings from switching outweigh the costs. Use tools available online to compare rates and ensure you’re getting the best deal.

Supercharge your super

Lower rates can also mean reduced returns for retirees and those close to retirement. If you’re still working, consider making extra contributions to your superannuation. Even small amounts can make a big difference due to the power of compounding interest.

Prepare for the future

Interest rates don’t stay low forever, so now is the time to think ahead. If you’re enjoying lower repayments, use this time to create a buffer for when rates inevitably rise again. Whether it’s saving extra in an offset account or paying down your debts faster, small actions now can protect you in the future.

Educate yourself

Take this opportunity to build your financial knowledge. Whether it’s understanding how interest rates impact your investments, learning about property markets, or brushing up on your retirement planning, education is key to staying ahead.

Make low rates work for you

Periods of low interest rates can feel like a relief, but they’re also a unique opportunity to get ahead financially. By being intentional with your extra cash flow, you can reduce debt, build wealth, and prepare for the future.

Remember, the smartest financial decisions often require discipline and planning. Use this time to take control of your money and set yourself up for long-term success.

By Alexandra Cain

You’ve worked hard for your money, so it makes sense to put it somewhere that is going to benefit you. Two choices for people with a home loan can be an offset account and a redraw facility.

While they have similar features, there are some differences to understand when deciding the right option for you.

The flexibility of an offset account

An offset account is a transaction-style account linked to your home loan. Any funds deposited into it are ‘offset’ against your loan balance daily, so you only pay interest on the smaller amount.

Let’s say you have a $500,000 mortgage and have accumulated $50,000 in your offset account. You’ll only pay interest on $450,000.

Because offset accounts can be flexible and interest is calculated on a daily basis, they may be a good place to receive your salary. While your salary is sitting in the account offsetting interest, you can use a debit card linked to the account to pay for everyday expenses.

Some people choose to use a rewards-points-earning credit card to pay for the monthly expenses, then pay off the credit card balance each month using the funds in the offset account. While this can mean extra savings in interest, it only works if you’re diligent and able to pay off your credit card balance each month.

There are both pluses and minuses to think through when deciding whether an offset account is right for you. Offset accounts can be a great way to reduce the interest paid on your home loan. These accounts allow you to access your funds at any time to cover unexpected expenses or other costs.

But having a mortgage with an offset account attached may mean you pay a higher interest rate and/or higher fees and charges compared to a mortgage without these features. Also, be aware that if you pay a fixed interest rate, only a few lenders will also offer an offset account with your mortgage.

Making extra repayments with a redraw facility

Rather than being a separate account, a redraw facility allows you to make additional repayments on your home loan, over and above your minimum monthly repayments.

Let’s say you have a $500,000 mortgage and you have deposited $50,000 into your redraw facility. Your mortgage balance will fall to $450,000 and you will only pay interest on this amount. Provided the loan’s conditions are met, you are able to access, or redraw, the $50,000 you have added to your home loan.

In contrast to an offset account, the funds in a redraw facility pay down the loan’s principal amount. So depositing money in a redraw facility instead of an offset account may mean you are less likely to access the funds, so the loan may be repaid sooner.

There are lots of small but significant differences between the redraw facilities offered by lenders.
Some may require a certain number of days’ or weeks’ notice before they will give you access to your funds. Others may let you immediately withdraw funds in a redraw through a banking app.

Like an offset account, loans with a redraw facility may attract higher fees and charges. Also be sure to check the fine print on your loan arrangement, as there may be a limit on the number of times redraws can be made each year, or there may be limits on the minimum or maximum amount that can be redrawn.

Do your thinking

There are lots of things to bear in mind when deciding if an offset account or redraw facility is right for you, including:

• What’s your priority? Are you looking to pay down your principal loan amount as quickly as possible, or use your salary and savings to save you money in interest?
• How often do you want to access your money? Do you need the flexibility of a transaction-style account?
• Can your employer pay your salary into your offset account, and do you have other savings or investments you could deposit into the account to boost its interest-saving potential? Offset accounts often really come into their own the more money you have sitting in the account.
• If you were to leave your salary in an offset account and use a points-earning credit card to pay your expenses, how confident are you in your ability to pay off the balance each month?
• If you plan on renting out your home, it may be better to opt for an offset account. Redrawing advance payments of your loan for personal expenses will reduce the portion of interest that is deductible. It also means you have to track the amount of redraws, so that you can calculate the deductible portion.
• If you are receiving Centrelink payments, how will these be affected? For example, if you are applying for JobSeeker Payment (in which case Centrelink may impose a liquid assets waiting period), an offset account will be counted when calculating the waiting period, however any advance payment available for redraw will not be counted. When applying the asset and income test to the assessment of an income support payment (e.g. Age pension or JobSeeker), Centrelink will count the offset account, however they will not assess the amount available for redraw.

Some lenders may offer the option of both an offset account and a redraw facility. This may suit those who want the best of both worlds – the ability to make large advance payments towards their mortgage, plus the ability to access their funds whenever they want.

Like most money decisions, there is no right or wrong answer. As always, the right choice for you depends on your own personal circumstances and what you’re most comfortable with.