Paul's Insights: Scrooge-onomics hit three out of four this Christmas
It could pay to hang out some of your smaller stockings for Santa Claus this year. Research by Finder shows three out of four Australians are tightening their purse strings this festive season, and drawing a line on gift giving.
Ebenezer Scrooge may have been onto something when he said, “Bah! Humbug” to Christmas presents because in pure economic terms gift giving doesn’t always stack up. I may spend $100 on a present for my wife, but if she doesn’t like it she won’t get $100 worth of enjoyment. And for economists that means breaking one of the golden rules of spending.
It’s a line that fewer of us are willing to cross this year. From bulk buying to DIY gifts, Finder says 76% of Australians are looking to cut costs this Christmas.
One in two people are setting a spending limit for gifts, while 17% are running a Secret Santa to cut the number of people they have to buy for. The same percentage will make their own gifts, and 13% of us will rummage through last year’s presents to re-gift unwanted items in 2018. A further 15% will take a leaf straight from Scrooge’s book and skip presents altogether.
It’s not the sort of news that will be welcomed by the retail sector, which relies heavily on the bumper Christmas spending boom. But the next few weeks are a time of year when we’re under a fair bit of pressure to buy something – anything – for friends and family.
Perhaps this explains why so many of us don’t receive gifts we particularly value. Gumtree’s 2017 Unwanted Gifts Survey found Australians collectively received more than 21 million unwanted gifts last year, with an average value of $68 each. It doesn’t help either that one in five of us admit to shopping online after we’ve had a few too many festive drinks.
Christmas really is a magical time of year, but it’s always worth thinking twice before wasting money. Make a list, make a budget, and make it count are handy guidelines to follow.
It can be worth doing some research to find out what you could give that will be truly valued – and kept. Maybe you could help a family member with your time instead of buying yet another unwanted gift. Consider pooling your money with friends and family to purchase quality rather than quantity. Or run the risk of receiving the novelty t-shirt you’re gifting this year, in your own Christmas stocking next year.
Paul Clitheroe is Chairman of InvestSMART, Chairman of the Australian Government Financial Literacy Board and chief commentator for Money Magazine.
Frequently Asked Questions about this Article…
According to research by Finder, three out of four Australians are tightening their purse strings this festive season due to economic considerations. Many are setting spending limits, opting for DIY gifts, or even skipping presents altogether to manage their budgets better.
Some popular cost-saving strategies include setting a spending limit, participating in Secret Santa to reduce the number of gifts needed, making DIY gifts, re-gifting unwanted items from previous years, or even skipping gifts entirely.
The retail sector heavily relies on the Christmas spending boom. However, with more people cutting back on gift-giving, the sector may face challenges as fewer purchases are made during this critical period.
Traditional gift-giving can lead to economic inefficiencies, as the recipient may not value the gift as much as its cost. This results in wasted money and resources, especially if the gift is unwanted or unused.
To ensure your gifts are appreciated, consider doing some research to find out what the recipient truly values. You might also consider giving your time or pooling resources with others to purchase a more meaningful gift.
Online shopping can sometimes lead to impulsive purchases, especially if done after consuming festive drinks. This can contribute to the accumulation of unwanted gifts and overspending.
Alternatives to traditional gift-giving include offering your time to help a family member, pooling money with others for a quality gift, or simply enjoying the holiday season without exchanging gifts.
To manage your Christmas budget effectively, make a list of potential gifts, set a spending limit, and stick to it. Consider cost-saving strategies like DIY gifts or Secret Santa, and always think twice before making a purchase to ensure it will be valued.
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