The end-of-year period is normally marked by social events, gifts and a summer holiday – but are Aussie households too cash-strapped to spend on Christmas and holidays? New research reveals that nearly 4 in 5 (78%) households will spend less or completely forego Christmas this year.
The findings come from a survey of an independent, nationally representative panel of 1013 Australians commissioned by financial information platform Money.com.au.
On average, $19.8 billion is spent on gift purchases by Australians each year. However, the survey results found that 39 per cent of people will spend less on Christmas gifts, while 12 per cent said they won’t buy gifts at all. This change in consumer behaviour is expected to have a significant knock-on effect on the retail sector.
The local travel industry is also likely to suffer alongside cash-strapped households. Even with States open for regional travel and some borders open, 38 per cent of respondents will forego a holiday this summer, while 20 per cent will reduce their holiday budget.
The findings also reveal 28 per cent of households will spend less on Christmas celebrations and Christmas lunches or dinners this year. Sadly, 10 per cent won’t have a Christmas celebration at all.
Overall, 44 per cent of households will spend less on Christmas celebrations, food, gifts, and a summer getaway this year, compared with previous years.
Purchasing gifts and other expenses for the December-January period can be a major financial stressor for households. Money.com.au found that nearly a third (31 per cent) of respondents are making financial sacrifices to be able to afford some holiday expenses.
Among respondents who have been budgeting for this period, 37 per cent have been setting aside funds this year to pay for it. Meanwhile, 32 per cent said they will choose a credit option – such as credit card, buy now, pay later services or layby – to fund these expenses. One in three (31 per cent) will dip into their savings.
“With many households experiencing financial hardship this year – and with an uncertain economic recovery – it may be wise to cut back spending on Christmas and holiday expenses. I encourage households to review their financial situation now to determine how much they can spend this summer. I also encourage people to be conservative in their spending, particularly if they are dipping into their savings.
Licensed financial adviser and Money.com.au spokesperson Helen Baker
“Consumers may also want to consider not incurring credit card debt for these end-of-year expenses in case they are out of a job next year. However, if you are in a good position and use your credit cards for points, you may want develop a strategy for it. Rather than pay your credit card when it is due, do a balance transfer to buy yourself say six months interest free. This will keep more of your money in your home loan offset account, for instance, guaranteeing a reduction in interest on your home loan whilst also saving interest on your credit card. However, make sure you pay it off when due though!”
