Buyer’s regret: the purchases we wish we hadn’t made are on the rise
New data shows more Australians are having second thoughts about racking up certain kinds of debt
New data shows more Australians are having second thoughts about racking up certain kinds of debt
One in two credit card holders regret a purchasing decision they’ve made using plastic, with Australians racking up a record $34 billion on their cards per month.
Research by Finder found 52 percent of Australians have felt buyer’s remorse, with the top categories of rued expenditure being clothes, shoes and accessories (12 percent), gambling products and services (8 percent), other expenses (6 percent), holidays (5 percent) and entertainment including concerts and sports events (5 percent).
The findings come amid a cost-of-living crisis caused by the highest inflation rate in decades and the highest official interest rates since 2012. Consumers are tightening their belts, with the latest retail trade figures showing turnover is still rising but at the slowest annual pace in 40 years, as we begin to see the typical lagged impact on household budgets of 12 interest rate rises since May last year. The retail data from the Australian Bureau of Statistics shows people are restricting their spending on household goods but are still happy to pay for meals and drinks at cafes and restaurants.
“Considering how high inflation and strong population growth has added to retail turnover in the past year, the historically low trend growth highlights just how much consumers have pulled back in response to cost-of-living pressures,” said ABS head of retail statistics, Ben Dorber. Other ABS data shows household savings ratios have fallen to their lowest level since 2008, with Australians having now depleted record savings amassed during the pandemic due to stimulus payments and periods of lockdown.
Latest figures published by the Reserve Bank of Australia revealed consumers spent a record $34.4 billion on their credit cards in August, up 6.8 percent on the same time last year. The Finder research showed Australians charge an average of $2,584 on their credit cards per month.
Finder’s credit card expert, Amy Bradney-George, said Australians should focus on their long-term patterns of spending rather than one bad purchase. “Millions have experienced buyer’s remorse, but the repercussions could be far reaching if these regrettable purchases become a habit. Many of us have bought something without considering our household budget, but with the rising cost of living, a bad buy now can hurt more than it might have a few years ago.”
Bradney-George said impulse buys or other unplanned purchases “can wreak havoc on your finances, especially if you don’t pay your credit card off in full each month.” She advised consumers to “sleep on it” to avoid impulse spending. “If you still want the item 24 hours later, it can be easier to justify and manage the cost.” She points out that some credit card issuers allow consumers to set spending limits or blocks on certain types of transactions, which could help reduce temptation.
It is crucial that consumers pay off their credit cards in full every month, said Bradney-George. “This could mean timing repayments to match up with your payday, setting up automatic payments through your credit card account or putting reminders in your calendar. If consumers are struggling with credit card debt, it might be time to shop around for a 0% balance transfer deal which will allow them to pay off their debt without drowning in extra interest charges.”
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Continued stagflation and cost of living pressures are causing couples to think twice about starting a family, new data has revealed, with long term impacts expected
Australia is in the midst of a ‘baby recession’ with preliminary estimates showing the number of births in 2023 fell by more than four percent to the lowest level since 2006, according to KPMG. The consultancy firm says this reflects the impact of cost-of-living pressures on the feasibility of younger Australians starting a family.
KPMG estimates that 289,100 babies were born in 2023. This compares to 300,684 babies in 2022 and 309,996 in 2021, according to the Australian Bureau of Statistics (ABS). KPMG urban economist Terry Rawnsley said weak economic growth often leads to a reduced number of births. In 2023, ABS data shows gross domestic product (GDP) fell to 1.5 percent. Despite the population growing by 2.5 percent in 2023, GDP on a per capita basis went into negative territory, down one percent over the 12 months.
“Birth rates provide insight into long-term population growth as well as the current confidence of Australian families,” said Mr Rawnsley. “We haven’t seen such a sharp drop in births in Australia since the period of economic stagflation in the 1970s, which coincided with the initial widespread adoption of the contraceptive pill.”
Mr Rawnsley said many Australian couples delayed starting a family while the pandemic played out in 2020. The number of births fell from 305,832 in 2019 to 294,369 in 2020. Then in 2021, strong employment and vast amounts of stimulus money, along with high household savings due to lockdowns, gave couples better financial means to have a baby. This led to a rebound in births.
However, the re-opening of the global economy in 2022 led to soaring inflation. By the start of 2023, the Australian consumer price index (CPI) had risen to its highest level since 1990 at 7.8 percent per annum. By that stage, the Reserve Bank had already commenced an aggressive rate-hiking strategy to fight inflation and had raised the cash rate every month between May and December 2022.
Five more rate hikes during 2023 put further pressure on couples with mortgages and put the brakes on family formation. “This combination of the pandemic and rapid economic changes explains the spike and subsequent sharp decline in birth rates we have observed over the past four years,” Mr Rawnsley said.
The impact of high costs of living on couples’ decision to have a baby is highlighted in births data for the capital cities. KPMG estimates there were 60,860 births in Sydney in 2023, down 8.6 percent from 2019. There were 56,270 births in Melbourne, down 7.3 percent. In Perth, there were 25,020 births, down 6 percent, while in Brisbane there were 30,250 births, down 4.3 percent. Canberra was the only capital city where there was no fall in the number of births in 2023 compared to 2019.
“CPI growth in Canberra has been slightly subdued compared to that in other major cities, and the economic outlook has remained strong,” Mr Rawnsley said. “This means families have not been hurting as much as those in other capital cities, and in turn, we’ve seen a stabilisation of births in the ACT.”
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