The tinsel and decorations might still be in a box under the stairs, but now is the time to think ahead so that you don’t join millions of Australians saddled repaying holiday debt well into 2022.
One of the leading pressures on many people’s already-strained financial position is the habit of over-spending on gifts; gifts that don’t necessarily prove our love for others.
In this three-part series, we will explore the size of our national gift-buying obsession, look at the health impacts of the financial stress that follows, and then explore how a targeted mindfulness practice can help change the auto-pilot approach to gift-giving while potentially bringing us even closer to loved ones.
There is also a real likelihood that gift-giving becomes retail therapy in these uncertain times – a set of behaviours we use to try and feel a bit better. But as Financial Mindfulness has found, overspending has the opposite effect on our stress levels.
Overall, Australian households spent an average of A$6,000 each over the Christmas season in 2020, the six-week spending frenzy from mid-November to the end of December. All retail spending, including food, alcohol, and gifts totalled a massive $55 billion spending binge, which made it a record Christmas for retailers.
The Reserve Bank of Australia estimated that over the four weeks of December 2020, $24.3billion was splurged just on credit cards. Tens of millions more were spent on so-called buy now, pay later accounts.
This year Christmas spending will follow similar patterns, possibly slightly exceeding spending in 2021, although there is expected to be a shift towards online spending.
What all this means is that nearly half a million of us will take up to six months of 2022 to pay off debts incurred in November and December 2021.
Those debt repayments will be on top of juggling usual repayments and bills, such as home loans, student loans and/or car instalments, insurances, and rent.
The national home loan bill in 2019 topped A$2 trillion for the first time, according to Illion, with an estimated 42 per cent of Sydneysiders with a home loan under mortgage stress.
But while we are dealing with debt repayments, the perceived pressure to buy gifts and to get a little retail therapy never lets up for long.
Retailers are so creative now they tend to attach a major sale to almost all significant dates in the calendar, including milestones that have not traditionally been associated with gift-giving and spending.
So Boxing Day and New Year’s Day become days to buy and even treat others. Australia Day sales will advertise Aussie memorability in the form of clothing, flags, food, and trinkets.
Back-to-school sales in mid-January are no longer just about what our kids need, increasingly they market to parents what children want.
In theory that sounds reasonable, but in practice, it can mean excessive spending on gifts such as technology, bags, and clothing as children try to maintain or create an image to garner popularity with their peers.
Without clear boundaries, pressure to indulge in this kind of gift-giving to materially bolster children’s self-esteem can occur whenever kids are set to return to school after holidays – so several times a year.
On February 14, Valentine’s Day is of course a major date on the retail calendar.
On average Aussies spent around $180 each for their significant others, while the nation splurged over $1 billion on Valentine’s Day gifts.
A new arrival on the retail calendar is ‘Cash Mob Day’ which falls on March 24 in 2022.
Cash Mobs are based on the viral trend of ‘Flash Mobs’, but instead encourage people to spend up to support local businesses. It’s a worthy idea, but again, a retail trend that creates a reason to buy something you actually don’t need.
Easter is next, in April. Luckily the major supermarkets stock around 50 lines of chocolate each, not counting millions of Easter buns.
In recent years retailers are encouraging consumers to buy more than chocolate or buns though.
In 2021 marketing heavily pushed the idea of ‘Easter baskets for adults and children’. Adult basket ideas included jewelry and kitchen accessories, while kids’ baskets could include collectibles, toys, egg-decorating kits, and activity books.
Aussies spent up to $250 each at Easter in 2021.
On May 8 comes Mother’s Day, when consumer spending spikes to around $2 billion, according to the Australian Retail Association.
From mid-year there’s often a string of birthdays to buy for: the most popular months for birthdays in Australia include May, July, August, September, and October, according to the Australian Institute of Health and Welfare.
Anyone who has hosted a children’s birthday party knows how expensive and high pressure they can be, with parents forking out anywhere between A$300 and A$3000.
Then there’s the angst over how to please teenagers and other loved ones, a worry which is almost always settled by spending at or above our absolute limit.
Winter sales ramp up in May and June too, with major advertising campaigns.
In recent years end-of-financial year sales, which were only significant for businesses, have been repackaged as major consumer events, usually with the prominent capitalised acronym EOFYS, on promoted on large banners.
Then comes Father’s Day is September 4 (on which about A$900 million is spent), followed by weddings and wedding anniversaries galore as the weather warms up.
Spring and autumn are the most popular seasons, with April, September, October, and November the most popular months to get married.
At the end of November comes the frenzy that is Black Friday and Cyber Monday. In 2021 early figures suggested we spent over $5.4 billion, nearly double what was spent over that weekend in 2020.
While it seems like the right thing to show our love by buying new toys, trinkets, treats, and gadgets for children, family, and friends the cost is in black and white in our online statements.
We spend thousands upon thousands of dollars each year to try and please loved ones, when if the tables were turned, most of us would be happy receiving thoughtful, inexpensive gifts – or even just spending time with friends and loved ones if we knew they were battling financially.
According to data from the Financial Mindfulness – Financial Stress Index (FSI) Report – the vast majority (89%) of us are worried about money.
Digging deeper, we are completely overwhelmed (79%), downhearted (82%), and distracted (77%) by our financial situation.
Financial Mindfulness estimates the resulting lost productivity costs Australian businesses is $32.14 billion per annum.
AMP’s 2020 Financial Wellness Report in November 2020 found financially stressed employees are ineffective at work for approximately 7.7 hours a week, and absent for a further 1.2 hours a week through sick days.
The report said nearly half of Australian workers are feeling financially stressed for an average of six and a half years or more.
To find out how financial stress affects our health, check out part two in this three part series.