But is dopamine hit from spending worth it, asks broker
In the midst of difficult financial times for many mortgage holders, now is the time to moderate your spending, says mortgage broker James Brett.
Brett, the principal of brokerage Truly Finance, said it was important when it came to spending that people ask themselves whether they would be better off if they spent more money.
According to Brett (pictured above left), at a time of year when many people do things to excess it might help to ask if the short-term dopamine hit from spending is worth it in the long run, and if indulging in more food and alcohol is a good idea as well.
“Can we give ourselves more long-term intrinsic motivation and satisfaction by saving, instead of a short-term rush?” Brett said.
Commonwealth Bank data shows spending to rise
Brett’s comments coincide with the release of new consumer research from the Commonwealth Bank of Australia (CBA) which reveals nearly one in two people (49% of Australians) had made plans to shop during the Boxing Day sales this year. This is up from 42% in 2022 and 40% in 2021.
CommBank personal finance expert Jess Irvine (pictured above centre) said cost-of-living pressures were driving a significant change in shopping behaviour among Australians.
“Aussies are becoming much more price sensitive and responding to the higher cost of living by looking for discounts and deals,” Ms Irvine said.
The main demographic who plan to shop on Boxing Day are those aged 39 and under, reflecting recent data from last month’s CommBank IQ cost of living report, which found younger Australians are feeling the most pain from rising prices.
CBA chief economist Stephen Halmarick (pictured above right) said the increase in spending at discount and variety stores in November was partly explained by Christmas and holiday shopping with discretionary spend up 1.9%.
“However, people are also using the sales to stock up on essentials – with essential spending edging up 0.3%. Essential spending usually falls after the ‘gift-giving’ period,” Halmarick said.
“However, given consumers are clearly seeking sales bargains for both essential and discretionary items, Boxing Day sales could also see a similar trend with a larger share of essential spending.”
Broker recommends people save first and spend second
Brett said he would advise those concerned about their financial situation to “save first and spend second”.
“This is one of the greatest techniques of all time,” Brett said.
When it comes to sales, Brett reminds people that sales are techniques retailers use to help people spend more than they probably need to.
“If there were no Black Friday/Cyber Monday/Boxing Day/New Year sales, would we spend more, or would we spend less?” Brett said. “Are we buying things that we need or things that we want? I’m just raising questions that I think are good for self-reflection.”
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