The pandemic may have changed our shopping habits on what, when and how we spend, but our track record tells us we are still likely to spend big in the lead up to the traditional holiday season.
In 2020, Australians spent $31.6 million in the month before Christmas, well above pre-pandemic figures, and spending was up 5% for the week of the Boxing Day sales year on year.
It seems that while spending on travel may have reduced with border restrictions, home-related spending grew stronger than pre-pandemic rates.
So is there a good reason for spending over the festive season? Does it come down to psychology? Do we need to closely monitor our spending during this period?
Psychology of holiday season shopping
For years, psychologists and analysts have noted the connection between holiday season shopping and impulse buying. Each year, a notable shift in consumer spending occurs during the holiday season: shoppers become more spontaneous in their spending habits.
A US report suggested that one in three purchases is made on impulse during the holiday season.
Here in Australia, generally, two-thirds of us browse on eCommerce sites without the intention to buy - however 77% end up making an impulse purchase.
Apart from impulse buying, consumers tend to seek out the best prices in what researchers call 'smart shopper feelings' and are influenced by FOMO - the fear of missing out - during one of the largest sale periods of the year.
We not only spend on others but often on ourselves too. Spending can be one of many other methods people use to fill an emotional gap in their lives - the adage of retail therapy.
Being aware of your expenditure and consciously avoiding overspending can help prevent spending hangover where you are left with debt.
Reasons to avoid overspending
- Credit score - if not controlled and payments are not made on time, your credit score and financial health could be affected.
- Finance related stress - can compromise your health and affect your appetite, mood, ability to focus and potentially increase your blood pressure.
- New school year - the start of another school year brings with it additional costs.
- School holiday spending - on recreational activities, holidays and holiday camps can hit the bank balance.
- Never-ending cycle of spending - Can occur with a feeling of not being fulfilled with what you have, always seeking more and better things.
Under normal circumstances, the holidays can be a stressful time. But the extraordinary circumstances of the pandemic have added financial strain for many of us.
We need to be conscious of our spending habits and make an effort to not spend above our means if we want to be in a good financial health leading into our later years.