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Australians rebounding from pandemic

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Australians rebounding from pandemic

Financial Mindfulness was reported in Money Management on its latest financial stress survey.

Australians assessed as “thriving” financially have rebounded after sliding backwards during the first six months of the COVID-19 pandemic, according to Financial Mindfulness.

The firm’s Financial Stress Index (FSI) showed that 25.8% of 645 respondents were rated as “thriving”, a proportion that was 18.8% pre-COVID, but crashed 2.4% during the first six months of 2020.

The research had also found an almost 10 times increase in those that experienced finance distress due to COVID-19, while 64% of people experienced financial shame.

Andrew Fleming, Financial Mindfulness chief executive and founder, said Government support likely stopped financial stress from spiralling as people became uncertain about their financial position during the pandemic.

“When people stopped going out, their personal savings increased and at the same time interest rates were adjusted to their lowest levels in history,” Fleming said.

“The combination of extra savings and cheap money fuelled a personal and Australia-wide economic bounce back. This is reflected in the FSI data collected at February 2021.

“This ‘bounce-back’ is evidenced in falling unemployment, gross domestic product (GDP) levels increasing and another property boom.”

The proportion of respondents that were “managing” fell from 41.5% in the first six months of the pandemic to 26.1% in the six months from September 2020 to the end of February 2021.

A smaller number of people in chronic financial stress, categorised as “distressed” continued to increase throughout the pandemic, with financial and psychological factors the main drivers.

Those who identified as excessively eating, drinking, smoking due to their financial situation returned to pre-COVID levels.

On average 16% of people often had physical stress relating to their money worries and 71% were distracted because of financial concerns.

Agitation was the most common somatic symptom of financial stress (71%), followed by tension (69%) and inability to “wind down” (65%).

Many took an “ignorance is bliss” approach, either ignoring the situation (57%) or recklessly spending (57%).

66% of people note financial stress had negatively impacted their relationships and 59% experienced conflict with loved ones.

“While it is clear that some people have bounced back, there are many Australians who unfortunately continue to experience considerable financial stress,” Dr Nicola Gates, Financial Mindfulness consultant clinical neuropsychologist said.

“Inequity is increasing in Australia, and increasing inequality is associated with increases in financial distress.”

Published in Money Management on 6 April 2021. Credit: Chris Dastoor

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Staggering number of Australians with less than $2000 in the bank

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Staggering number of Australians with less than $2000 in the bank.

Financial Mindfulness was interviewed by the Daily Mail on the latest study on financial stress. These results show just how dire circumstances are for some Australian’s.

Revealed: The staggering number of Australians with less than $2000 in the bank – and why the slow Covid vaccination rollout could leave them financially ruined.

Financial Mindfulness study showed 34 per cent of people couldn’t raise $2,000 Almost half or 45 per cent of Australians can’t pay their weekly household bills Financial Mindfulness chief Andrew Fleming: those with low savings were at risk

Government and employers calling for halt to major minimum wage increases

A surprising number of Australians would struggle to raise $2,000 for a hot water, car or medical emergency and a slow Covid vaccine rollout could make that worse.

Australia’s eight-year run of weak wages growth is set to continue with both the federal government and employer groups calling on the industrial empire to withhold pay increases, despite the strong economic recovery from the Covid recession.

Money wellbeing app Financial Mindfulness surveyed 645 Australians and found 34 per cent of them would be unable to raise $2,000 to cover a financial emergency.

Almost half, or 45 per cent, could not meet their weekly household bills, the barometer of economic health taken in February 2021 found.

A surprising number of Australians would struggle to raise $2,000 for a hot water, car or medical emergency and a slow Covid vaccine rollout could make that worse. Pictured is a stock image

Financial Mindfulness chief executive Andrew Fleming said people with less than $2,000 in bank savings were particularly at risk.

A medical expense or a hot water system blowing up or a car breaking down: an expected expense hits people for six,’ he told Daily Mail Australia.

‘A lot of people are living week to week.’

Consumers already struggling with a mortgage, rent or credit card bills are increasingly turning to buy now, pay later apps, like Afterpay or ZipCo, or pay on demand, where individuals pay $80 a month to get $2,000 in the bank before their employer pays them.

Mr. Fleming said many Australians were unaware of the penalties they faced if they were late with repayments during a personal financial emergency.

‘For those who can’t raise $2,000 for an unexpected expense in the last month, there’s a high probability they’re going to resort to these new products – does the user really understand what they’re doing?,’ he said.

The past year has been very volatile, with the Covid shutdowns causing a 7 per cent plunge in gross domestic product, the steepest downturn since the 1930s Great Depression.

But the final six months of 2020 saw a 6.5 per cent surge in economic growth, the fastest-ever half-yearly pace of GDP expansion.

Despite that, the federal government is calling on the Fair Work Commission to refrain from giving Australia’s 2.2 million low-paid workers a substantial pay rise on July 1.

Fair Work Commission
The federal government is calling on the Fair Work Commission to refrain from giving Australia’s 2.2million low-paid workers a substantial pay rise on July 1. Pictured is a cafe at Brunswick in Melbourne

The federal government is calling on the Fair Work Commission to refrain from giving Australia’s 2.2 million low-paid workers a substantial pay rise on July 1. Pictured is a cafe at Brunswick in Melbourne

‘Given the current uncertainties in the domestic and international economic outlook, the government therefore urges the panel to take a cautious approach.

Taking into account the importance of creating jobs for Australians and ensuring the viability of the businesses, particularly small businesses, which provide the jobs which are crucial to the economic recovery and the wellbeing of Australian families,’ it said.

The National Farmers Federation went further in its submission to the annual wage review, arguing minimum wage workers should get no pay increase until the Covid vaccine was given to most Australians.

‘The NFF recommends that the minimum wage be maintained at current levels until economic conditions have improved, market volatility has decreased, and the level of financial risk lowered,’ it said.

‘These conditions can be reasonably expected to materialise once trends indicating a recovery can be confirmed and the risk of additional waves of infection minimalised following the roll-out of the AstraZeneca vaccine.’

Mr. Fleming said the prospect of more weak wages growth would put struggling consumers at risk.

‘If expenses are going up, out of your control, and income is stagnating, there’s a problem,’ he said.

Money wellbeing app Financial Mindfulness surveyed 645 Australians and found 34 per cent of them would be unable to raise $2,000 to cover a financial emergency.

Almost half, or 45 per cent, could not meet their weekly household bills, the barometer of economic health taken in February 2021 found

On July 1 last year, the Fair Work Commission agreed to give minimum wage earners a $13 a week pay increase which saw their wages edge up slightly to $753.80 a week or $19.84 an hour.

The 1.75 per cent wage increase was below the inflation rate at the time of 2.2 per cent.

Since then, inflation was shrivelled to just 0.9 per cent, putting it well below the Reserve Bank of Australia’s 2 to 3 per cent target range.

As found in the Daily Mail

Daily Mail

By STEPHEN JOHNSON, ECONOMICS REPORTER FOR DAILY MAIL AUSTRALIA.

 

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The 10 biggest barriers to peace of mind in 2021

biggest barriers to peace of mind in 2021

Call it what you will, peace of mind, inner peace, sanity, contentment, serenity – that feeling of freedom from when your brain just won’t shut up and in bad moments you feel only marginally less negative about the world and others than you do about yourself.

In a world full of fear about the pandemic, your job, financial stress, the planet, walking home late at night, whether your kids are safe, the next interest rate rise or maybe that secret we pray never sees the light of day, most of would rather spend time with a sustained, quiet satisfaction than on a speedboat with champagne and celebrities.

It’s a different feeling from ‘happiness’ – though most of want that too.

Happiness is great but in truth it is usually a passing state, although certainly one to be grateful for. Nobody is happy all the time and if they claim to be, well, good luck to them. Contentment or peace of mind is true freedom. So how do we break the chains that hold us back from freedom of the mind in 2021? Here are some ideas.

Worrying excessively about Covid

By this we don’t mean to say it’s not a real thing, actually, quite the opposite. When we accept the evidence of reliable and dour scientists and public health experts and just do what they suggest, the surprising effect is we have less to worry about. That’s because we are not fighting it anymore – and fighting is very often based in worry and fear.

We suggest keeping yourself, your family and your workplaces as Covid-safe as reasonably possible, doing what is asked by authorities – and outside of that, concentrate on living your life. Make your time count for and with those that matter.

Too much screen time

If scrolling through Facebook a few times each day, or news websites, makes you feel connected, or if you have Netflix and just wanna chill, good for you, do it. But if you do it again, and again (and again), sorry to break it to you, but you are not living a healthy life. Period. And as for social media being sociable? Give me a break, Facebook is about as ‘social’ as a phone plan “cap” that somehow makes you spend more.

When used for a specific task, with time limits, social media can be fun and creative but used unconsciously and habitually it is empty, pretend connection. Hit the X on that tab and go get some real face-time with friends, or write someone a letter. If they are across oceans, ring them up to talk and if you can, start saving to go see them.

Putting up with financial stress

No, we are not about to suggest some wealth maximisation (aka get-rich quick) scheme. We are suggesting that continuing to live with worries about money is going to make you sick and/or keep you that way.

Financial stress is the biggest stressor for people in the United States and Australia, and as yet, employers aren’t doing much about that – although that is sure to change as corporate wellbeing programs catch up. In the meantime, do something about your low financial literacy, learn how to keep and stick to a budget, learn how to be mindful with money.

Do something about your fears over money. Be grateful for what you already have rather than always wanting more. Try to stop spending money you don’t actually have yet with too-easy tools like Afterpay or ‘pay-on-demand’. If you really need more money, then take some action: study, look for a different job and if you have the time maybe do some more work in the evenings or at weekends.

Comparing yourself to others

When did this very human trait ever work out really well? Everybody has a bad day and sometimes everyone just looks fitter, richer, like they have more friends or are just more ‘together’. They might be, but they may have very serious problems you cannot see on the surface.

You might see someone worse off and feel grateful, but deep down you may also feel a bit empty from witnessing someone else’s suffering. And why were you comparing in the first place? Perhaps from a lingering sense ‘is this all there is’? Stop distracting yourself from your own life and try practicing gratitude every day.

It’s not hard it just takes commitment. Write a gratitude list. World famous monk David Steindl-Rast suggests we can only be happy when we are grateful and we can do this by reflecting on the valuable things in life that we have been given – not things we paid for or earned. Watch his wonderful TED Talk on gratitude here.

Caring too much about others

Kindness is a really nice quality at face value, we need more of it in the world. But if you secretly wish you didn’t have to do so much for others, or expect something in return for your good deeds you may be just be avoiding the difficult reality of your life and even co-dependent.

Co-dependence is a word similar to the phrase ‘Global Warming’, in that it sounds much friendlier than what it actually is. Global warming is really dangerous climate instability, which is a bit more than feeling cosy in winter. Co-dependence is adjusting your behaviours to please others, no matter the cost to your wellbeing.

People who think co-dependence is healthy are usually thinking of interdependence. “The healthiest way we can interact with those close to us,” according to Barton Goldsmith of Psychology Today, “is by being truly interdependent. This is where two people, both strong individuals, are involved with each other but without sacrificing themselves or compromising their values.”

Being busy, staying busy

If you need something done, as the saying goes, ask a busy person. While you’re at it, give them a gold star but whatever you do, just don’t ask them how their mental health is. If you are busy all the time, what is all that white noise doing inside your head? Do you feel calm, at peace? Never forget you are a human being not a human doing.

Busy-ness can feed anxiety, that nagging chatter in your brain that undermines your self-esteem. You need to stop, at least once a day, take stock, and rest with your own thoughts. Try mindfulness meditation as a way of learning to still the mind and accept your thoughts without judgement.

From that you may learn it’s ok to be still and that you are still valuable – perhaps even more valuable – if you don’t do quite so much. You’ll probably be easier to be around too.

Staying in a job where you don’t want to excel

Maybe it’s because you aren’t respected, the boss just cut staff numbers, or froze wages again but parks his new sports car in the basement. Maybe you are doing law or medicine or IT because you think it makes your parents happy.

Whatever the reason, you feel resentful at work but you stay anyway, usually because you think financially you are trapped, or that a career change would disrupt your life too much.

But getting stuck in a job you hate is a slow death of the soul, one that invariably impacts on your mood and can lead to acting out with (or internalising) anger or with impulse spending or even addiction.

Plus you just may be holding yourself back from a bright new chapter in your life. How will you ever know if you don’t try? At least allow yourself to dream or brainstorm what might make you a happier person.

Treat your grudge like a tiny kitten

Who isn’t angry deep down about someone who harmed them in some way? Not everyone, sure, but a lot of people. If you get into a pattern of almost protecting that grudge every day, even nurturing it, guess what – it’s going to grow.

After a while you’ve held it so close that you begin showing it off, like an 8 year old with new roller skates. A resentment is not a pet, it’s a poison. Ever heard the saying ‘holding a resentment is like drinking poison and expecting someone else to get sick?’

It kinda is. Take action to deal with your resentment, work out your part in it, talk to them with a will to build bridges. And remember honesty without compassion is cruelty, or at least an invitation to an argument.

Doing nothing if you know you have a problem

You know what I’m talking about. That anger you hold, your unprocessed grief, your money problems (whether spending too much, ‘under-earning’ or just ignoring finances), your pattern of bad relationships, your secret addiction or unhealthy behaviour.

In recent years , Prince Harry has come out about the effect hiding his sadness about the effect of Princess Diana. “I can safely say that losing my mum at the age of 12, and therefore shutting down all of my emotions for the last 20 years, has had a quite serious effect on not only my personal life but my work as well,” London’s Telegraph reported Harry as saying.

Nobody is perfect or strong enough to deal with life’s train wrecks on their own. Pretending to be fine is going to stop working at some point, perhaps disastrously. But then what? Don’t waste any more time, start right away. There are different price points for counselling and support groups for all kinds of life issues from eating disorders to post-traumatic stress.

No matter what you think of yourself deep down, you deserve help. Imagine someone saying you didn’t deserve help – how would you react? So step outside your own head and go help that person – you.

Accepting reality

We touched on it above a few times: ignoring and resisting problems actually causes more grief and suffering than facing them.

That’s easy to say when it’s not us having that excruciating conversation, such as asking your lender for a hardship variation on your mortgage, or laying out the facts to the boss who doesn’t like you why you really do deserve a raise, or admitting to your partner that you haven’t been entirely honest.

Yes, uncomfortable conversations are difficult and painful. Especially when they are with ourselves. That might include actually following through to construct a budget and seeing the source of your financial problems.

But after the conversation is over, you have the beginnings of new, much healthier behaviours and habits. Yes, you have to follow through and things might get harder before they get easier, but you no longer be need to be burdened the solvable problems.

You just need to get moving and do something, beginning with the smallest of steps. The most important of those is to get real. Pretending that truly unsustainable situations – whether emotionally, financially, mentally or physically are fine and don’t need to change will just cause you unnecessary pain and drama.

Being real can sometimes hurt a bit, but as a way of thinking and understanding the world it’s both a relief and an effective change to make.

If you are experiencing distress in your life and live in Australia call: Lifeline 131114, Mensline 1300789978 or Beyond Blue 1300224636; regarding debt problems, the National Debt Helpline may be of use on 180 0007 007 , or go here for a list of hotline numbers relating to different crises.

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Want to avoid financial stress: ask yourself these questions

Want to avoid financial stress: ask yourself these questions

Want to avoid financial stress: ask yourself these questions.

There’s never been so many options for accessing cash quickly as there are today, and that’s very appealing around this time of year – especially this year, with many more people unemployed as a result of the ‘pandemic induced’ economic disruption.

Nobody wants to be in financial stress (or distress) or have money worries. But sometimes a quick fix becomes a long-term problem if we ‘go there’ over and over.

We all know the quick fixes to cashflow problems available today. On top of the huge success of ‘buy now, pay later’ products like Afterpay and ZipMoney, people are increasingly signing up to so-called ‘pay-on-demand’ services that – for a fee of around 5 per cent – will let you draw cash against your pay before it is deposited into your bank account.

New financial services arise (and succeed) because someone has identified a need and met that need. That’s fair enough. Financial products and services that give people flexibility and help them out of a squeeze are welcome. There are a lot of positives when one considers all the angles and different perspectives.

These new services, referred to above, are sign of the times. They also tell us some important things – that many people basically live paycheck to paycheck and that there is a groundswell of support for the idea that employers shouldn’t pay in arrears and instead should pay as people earn.

We need to be clear – and we urge mums, dads and singles to be clear about what these services really are: they are loans that have to be repaid.

As a rule, we cannot endorse the regular use of fee-based short-term loans to get by every week.

Here are at least four reasons:

  1. Paying regular fees for basically spending your own money is just adding another debit to your account, and it’s not insignificant (Think about it: how often would you pay $15 to withdraw $300 from an ATM?)
  2. The second reason is there’s a basic truth that these service providers (let’s call them small lenders, as that’s what they are) want you to ignore: spending more than you earn every week is a dangerous habit.
  3. Financial stress. See points 1 and 2.
  4. We believe that with ‘mindful spending’ – spending done with full awareness of your financial position and your needs and wants – you can reduce, and avoid, damaging financial stress.

The good news is that by using awareness and acceptance of your financial position, you can feel much more in control of your personal finances and your week-to-week expenses.

With a healthier financial mindset – where you aren’t experiencing the symptoms and impacts of financial stress – short-term loans become what they were designed for: a useful solution to an emergency cash flow problem.

Here are some questions to ask yourself if you regularly use ‘buy now, pay later’ services like Afterpay, and have used – or want to use – ‘pay on demand’ apps and services.

  1. When was the last time you looked at your credit card statement? If you are avoiding it, why is that?
  2. How many ‘buy now, pay later’ accounts do you have?
  3. Do you keep track of the total amounts owed? Are those totals increasing over time?
  4. How often do you use buy now pay later services?
  5. What do you buy using these products? To solve emergency money issues, or for normal living expenses? (Note: clothes and haircuts are rarely an emergency)
  6. How often would you use ‘pay on demand’ (getting an advance on your pay) apps and services?
  7. What would you buy with the money you receive from ‘pay on demand’ services?
  8. Is your overall financial position better or worse after using ‘buy now, pay later’ and/or ‘pay on demand’ services?
  9. What would it really take to improve your overall financial position?
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The real cost of gift-giving: financial stress – part 3

The real costs of gift-giving: Financial stress

The real cost of gift-giving: financial stress – part 3.

In ancient history giving gifts began as part of the ritual of worship and over the centuries it has morphed into a show of appreciation. In the age of mass consumerism gift-giving has become an expensive habit too, especially in holiday season.

While most of us worry about money to some degree, gift-giving has costs we usually bear without much complaint; giving is a respected value, it feels good and it’s accepted as a cultural obligation. Besides, we have special labels for people who don’t play along with gift-giving: who wants to be labelled Scrooge or the Grinch?

Let’s take a look at one specific festive custom: the excessive expectation everyone will have a present for everyone else who arrives on Christmas Eve or Christmas Day – whether they are young nieces and nephews, twentysomethings, cousins, partners of relatives.

Even exes in attendance get a gift. It’s probably no exaggeration to say half the gifts exchanged in these situations are politely put in a cupboard when they arrive home – and forgotten. The obligation to provide a pile of gifts – of appropriate value – across extended families can add tension to what is often already awkward family gathering. It almost certainly adds to seasonal financial stress.

Never mind that in the affluent West that many of us take months to repay debts incurred at Christmas time and in Black Friday and Boxing Day sales. So, at least reasons to buy expensive gifts are out of the way after Christmas, right?

Wrong. February and March tend to have the most weddings in Australia, which means wedding costs and wedding gifts for guests. February and March also have a lot of birthday spending, as those are the second and third most common months to have a baby. From there, the retail calendar kicks in: with gift-giving the norm in Easter, then for Mother’s Day – not to mention birthdays and anniversaries for the rest of the year.

Another type of gift-giving that is anecdotally growing is also worth noting: buying ourselves gifts and treats for our birthdays or just ‘getting through hard times’ such as COVID, often just because we see appealing items in big seasonal sales.

So, how can we avoid the financial stress that comes from adding new debt to existing debt, and the symptoms and impacts of that financial stress?

Some of us at some point have completed a budget (even if we can’t always stick to it) and humble enough to get financial advice to try and do better. We are not clueless.

But without an overhaul in our thinking, choosing gifts will remain stressful for many people. There can be a huge array of options and a nagging temptation to show our appreciation – for ourselves and others – by over‐spending.

If you have tried every trick to rein in spending on gifts it could be time to try something new – using mindfulness with your finances, also known as financial mindfulness. Mindfulness is described as moment‐by‐moment awareness.

Take the example of a teenager who “needs” for a sleek iPhone 10 as a gift, if not the newest flagship Apple phone, an iPhone 12 Pro Max. An iPhone 11 Pro Max will set you back at least $750 and a Pro Max 12 starts from the mid $1500s and rapidly goes up beyond $2000.

“We all have urges that we really, really want a new gadget like an iPhone, including me,” says Financial Mindfulness CEO and Founder, Andrew Fleming.

“It feels good to take it out of the box and start using it. The feeling of having the latest technology makes you feel cool and the children love it. Like anyone else I’ve learned those feelings don’t last long and they certainly don’t improve your life, despite what the ads tell us.

“Always having the latest iPhone won’t make me or anyone else truly happy. In fact always giving in to buying the new iPhone – or the latest of any brand of device – will actually decrease happiness because it will probably contribute to increased financial stress.”

The reason those sentiments feel uncomfortable is because they’re true. Researchers from Washington University and Seoul National University, Joseph Goodman and Sarah Lim, found that giving ‘experiences’ increases the happiness of recipients more than material gifts – even if people are not socially close.

Hence the boom for online companies selling “experiential” gifts: in Australia, RedBalloon; in the UK, Red Letter Days and in the United States, retailers like Cloud 9 Living and Great American Days.

But focusing on experiential as opposed to material gifts is unarguably only half of the answer.

While the research shows a hot‐air balloon ride or chocolate‐making course should satisfy the recipient more than boxed gift wrapped with a bow, if you try to please someone with the dollar value of your gift your debt problems could get worse and that is undeniably a problem.

Ever looked at the cost of sky‐diving, rodeo‐riding or maybe cage diving with sharks? You will spend hundreds, if not over a thousand dollars on these.

Financial stress is irrefutably linked to health problems like depression, anxiety and sleep disorders so it’s not a big leap to see that the expensive gifts you buy – whether material or experiential ‐ could paradoxically lead you to feel less likely to connect with other people.

Most of us know overspending will put pressure on us, but since when did knowing right from wrong stop human beings from making mistakes?

A parent, relative or partner with poor self‐control around money will often buckle to badgering from a child, or give into a yearning to people‐please, and buy that new smartphone, tablet, a holiday or even a car.

A daily mindfulness practice will lead to a more mindful approach to gift‐giving, so we do not drift into autopilot when buying. It’s inevitable this will lead us to confront some fundamental uncomfortable truths about money. “Mindfulness helps to calm the mind and with a calm mind we make better decisions,” Fleming says.

“Sometimes it’s a better decision to treat ourselves to a book or a movie or a massage instead of the latest smartphone.”

It’s important to note mindfulness is no silver bullet – it can however help you begin to change in that area. From there we can make some deep, meaningful changes: when we are forced to face old assumptions about money.

“There’s a big mindset change some of us need to make at times like Christmas, birthdays and weddings: how much we spend on people is not automatically a sign of our value and love for each other.”

Which brings us back to gifts. You can create lasting memories with creativity and your knowledge of a person.

How about home‐made cookies baked with personal messages – each describing why you love the recipient ‐ hidden in the dough? Or a hand‐made recipe book containing meal suggestions from the recipient’s family members?

Maybe get a t‐shirt printed with the recipient’s favourite funny saying or if you have time, plan a surprise outing and put thought into favourite stops and a destination, or even fill a tall jar with inspirational quotes written and printed in different colours.

If you have lots of time, learn the guitar then write someone a song and play it for them. If you don’t have much time, spend a couple of hours hand‐writing a letter telling the recipient what they mean to you. Could any gift feel better and teach about the real meaning of value?

Time is a key resource when it comes to gift-giving; you need to know someone or learn about them to know what might make them happy. And time is valuable. Benjamin Franklin was widely credited with the unforgettable line “time is money” in 1748 (although it’s been shown to have much earlier origins, perhaps even ancient Greece).

We can spend money and time, but where spending too much money might cause you crippling financial stress, spending a lot of time only enhances relationships – especially on children – by creating last memories.

Andrew Fleming says getting our minds to a state where we can see that spending time is just as valuable as money when it comes to gifts isn’t easy. “Everyone thinks they are time-poor.

One tool I know that can really transform how much time I think I have is mindfulness. Using mindfulness when I’m spending money means I make better decisions – no doubt about it.”

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The real costs of gift-giving: Financial stress – part 2

Our Guide to Last minute Christmas shopping guide

The real costs of gift-giving: Financial stress – part 2.

Who wants to buy something special for their partner, relative, friend or colleague on Black Friday or this Christmas? It’s a thoughtful idea given how tough 2020 has been – with bushfires, then the COVID-19 pandemic, various lockdowns and financial stress coming at Australians in waves all year.

If we are not aware of our underlying financial stress at this time of year, advertising pressure can trick us into an expensive false reality: that our usual safe spending limits don’t apply when it comes to proving our care for others.

It’s sad to think we actually believe that the price of gifts should be in proportion to what people mean to us – and yet our national gift-giving habits suggests we overlook the damaging realities of money stress at the checkout.

Megan McArdle of Bloomberg, argued “there is a higher logic to the gift economy … that mandates we keep giving and receiving objects of dubious value”.

Gift-giving, she wrote, was connected to “an innate human value called “reciprocal altruism” which makes the costs of gifts “a maintenance fee for your relationship”.

There are of course, real problems beyond warm and fuzzy feelings when altruism is all about money.

As well-intentioned as gift-giving is, the Christmas rush to buy gifts is sometimes only ‘generous’ financially; how often is our gift something the recipient really needs and will use?

Often, we believe we are too busy to understand our recipients real wants and needs. When we go into this kind of autopilot thinking, we can’t see that we are setting ourselves up for financial stress and its many impacts on our relationships, our work, and potentially making any existing anxiety and depression worse.

Research by Joseph Goodman (from Washington State University) and Sarah Lim (from Seoul’s Center for Happiness Studies) found people commonly buy material gifts over experiential gifts, despite the fact that recipients often feel happier receiving experiences.

Material gifts are those we can touch while experiential gifts are those that create a memory.

So, gift-giving becomes a stressful problem which we solve with money – by buying the latest expensive gadget, a heavily-marketed ‘luxury’ or some kind of timeless status symbol.

If it sounds mean-spirited to question gift-giving, that’s not the intention here. Only narcissists and debt collectors (and the occasional teenager) believe it’s better to receive than to give.

The problems raised here are not about gift-giving per se, it’s the headless chook race that it can resemble – and the financial stress and strain placed on many of us.

Last Christmas Australians splurged a mammoth A$28 billion on credit cards, according to finder.com.au – over $1,100 for every many woman and child.

Add the costs of Valentine’s Day, Easter, Mother’s Day, Father’s Day, birthdays, weddings and anniversaries and you can see how gift-buying has become a major driver of the retail engine in Western economies.

Of course, it’s a double-edged sword: retail spending is celebrated each year as a measurement of the strength of the economy. But at a personal level, buying gifts for everyone, and without mindful budgetary limits, will likely cause financial stress.

Debt consistently shows up in surveys as a leading cause of financial stress. But it’s now widely known personal money problems consistently show up in research as a major cause – if not the major cause – of stress in general.

The links between financial stress and poor mental health are well known, but recently the physical symptoms are being acknowledged and links to serious physical illness are emerging.

In the United States, the company Four Seasons Financial Education surveyed 511 employees in a national study and found disturbing correlations between financial stress and health problems. The respondents rated their level of financial stress, then the prevalence of health issues between two groups was compared.

People with high financial stress had higher reported incidence of health issues across all nine illnesses identified – heart attack, high blood pressure, depression, anxiety, infertility, gastrointestinal issues and sleeplessness, migraines/headaches and memory loss.

“The greatest disparities were found with anxiety and depression between these two groups,” the study findings said. In the groups with lower financial stress, 19 per cent reported depression and anxiety, but amongst the more financially stressed respondents, 55 per cent were depressed and 68 per cent had anxiety.

When the survey responses were further broken down, into the very highest and lowest levels of financial stress, people under extreme financial stress were five times more likely to have memory loss issues, more three times as likely to report depression and nearly twice as likely to have anxiety.

They were also twice as likely to have gastrointestinal problems.

Debt is a major cause of financial stress and the search for an answer has become a popular google search term in its own right, with variations of ‘how do I relieve my financial stress?’ common.

If you’ve tried all the usual advice and methods, it might be time to investigate a new approach, or at least, new tools to supplement what you are already doing.

In the final part of our series on the real cost of gift-giving, we look at how mindfulness can help reign in over-spending and the financial stress that often comes from increasing your debt burden at this time of year.