Money and mental health. It’s a topic we’re increasingly seeing in the news with the rise of Buy Now Pay Later platforms like Afterpay. Retail therapy has never been easier or more accessible to the masses. If you don’t have the cash to pay for what you want upfront, there are now multiple ways you can feed your materialistic cravings.
So, just how bad is the problem? If you find yourself itching to spend when you’re feeling down, then you may have a problem with ‘impulse buying.’ Comfort spending refers to the times where you spend money out of emotional discomfort, whether that’s boredom, stress or unhappiness.
A new report by Mozo surveyed over 1,000 Australians aged over 24 years on their comfort spending habits, and the results are enlightening! In this article, Nifty takes a deep dive into the report and what it’s findings might mean for you.
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Why are we indulging in impulsive purchases? According to Mozo’s research, for most people, it’s boredom. Nearly half of all respondents (47%) said they were driven to spend when they were left feeling bored.
Other popular reasons for comfort spending included stress or anxiety (45%), unhappiness (39%) and loneliness (27%). It’s worth noting too that 23% of respondents said just a bad day at work was enough to inspire a little impulse purchase.
To put these percentages into context, according to Mozo, these feelings are driving 81% of Aussies to spend $25.5 billion a year. Their estimates indicate that comfort spending accounts for approximately 3.4% of total annual household expenditure.
When it comes to comfort spending, most people reported clothes as their go-to retail therapy. In Mozo’s report, almost half of all respondents (45.8%) said getting their fashion fix was their preferred comfort purchase. Takeaway food (40.1%) and chocolate (39.7%) weren’t far behind though, with junk food (35.4%) and alcohol (24.7%) being a popular indulgence.
Once the results were broken down into genders, the report found clothing (61%) and chocolate (45%) to be especially popular with women, while men turned to takeaway food (41%) or tech and electronics (34%) to ease stress or boredom.
In terms of how we’re shopping, the news is generally good! Mozo found that most respondents (56.2%) paid for their comfort purchases upfront with their debit or EFTPOS cards. 13.6% even reported they would dip into their savings to pay instantly.
That said, many people weren’t afraid to put themselves in debt either. 48.8% of those surveyed said they would use their credit card for comfort spending, with 9% opting for buy now pay later services like Afterpay.
Interestingly, women were more likely to opt for debit or EFTPOS methods (61%) compared to male respondents. Instead, men favoured credit cards with 56% utilising the pocket-sized plastic as opposed to just 42% of women.
When it comes to spending, we tend to think of women as the worst offenders. However, Mozo’s report found gender to be a poor indicator of identifying people prone to impulse buying. Instead, it only appears that comfort spending is a factor when you look at how much is being spent.
Their survey found that half of the women who claimed to comfort spend limit their monthly spending to under $50. Yet, only 36% of men were able to keep their spending below that amount.
Although most people (67%) spend up to $100 a month, men appear to be more likely to spend more than that as opposed to women.
The findings of Mozo’s report offer some interesting insights into how and why we comfort spend. Generally, we seem to be most inclined to spend our hard-earned cash when we’re feeling down. For most people, this is probably not surprising as we’ve all felt that familiar urge to buy something that will make us ‘feel better’ at some point. In truth, comfort spending isn’t all bad either, as it’s important we reward ourselves from time to time.
The issues only arise when we rely on spending money to feel good or spend too far beyond our means. Based on Mozo’s report, it seems likely that men may struggle with this more than women. Even so, we can all fall victim to comfort spending, and when we do, it can be hard to see a way out.
If you find yourself falling into this category, then you need to consider setting yourself some limits to manage your spending. Fortunately, we here at Nifty have come up with five easy ways to get you started:
When we say budget, we’re not saying you need to establish a full-blown plan for how you spend your money each month. It doesn’t need to be overly detailed. You just want to have a clear idea in your head of how much you can spend on comfort purchases.
While the budget needs to be realistic to your income/expenses, the main point of your budget isn’t the amount, but your dedication to stick to it. A budget will hold you accountable for just how much you’re spending. The rest is up to you!
With the convenience of smartphones, it’s never been easier to make impulse buys. All you have to do is tap on the icon, and then within a few clicks, you could be making a purchase. So, if you find yourself gravitating towards certain shopping apps on your phone – delete them! Sure, the temptation to open a new browser may still be there, but at least it won’t be as accessible to you. Ultimately, there’s no point having shopping apps if they’re just going to fuel your bad habits.
You can fall into a ditch with impulse buys, particularly if you’re not conscious of any existing debts. The last thing you want to do is add to your credit card debt unnecessarily. So, each time you get paid, make sure you put a portion of your money towards repaying this debt. With that as your first priority, you can ensure you don’t bite off more than you can chew. Plus, it’ll help you avoid any defaults or late repayment fees! Nifty is able to offer personal loans, if you’re looking to consolidate debt or take out a micro loan, just apply to see if we may be able to help!
Most people are inclined to comfort spend when they’re bored. It’s not hard to see why scrolling through online stores can be an entertaining way to spend our free time. Yet, this kind of entertainment can tempt fate for some people. If that’s the case for you, then think about other ways you like to spend your free time. Is there a hobby, a TV show, or even a class you could occupy your time with instead? There are so many ways to cure boredom now, you just have to be open to looking!
To steer you away from spending the next time you have a bad day, set yourself a savings goal. Some people find it hard to get motivated about saving, but it’s often much easier if you set yourself a clear target.
Is there something you’d ultimately like to invest in one day? A new car? Your first home? If you give yourself something to work towards, it’s much easier to justify missing out on fun comfort purchases. Instead, you can find satisfaction in inching closer to your savings goal.
Nifty Loans is an online lender that strives to give everyone a fair go at accessing personal finance when you need it most. We offer small personal loans between $300 to $5,000 across Australia. Whether you’re looking to consolidate debt or take out a micro loan, we may be able to help!
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Since founding Nifty in 2016, Bell has continued to make waves within the local financial sector for his continued ambition and willingness to adopt emerging technologies.Read More