Spending

The real costs of gift-giving: Financial stress (part 2 of 3)

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, writing for 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.

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