S1: Hello and welcome to It All Adds Up the podcast
S1: where we chat about money, how to get it, how
S1: to spend it and how to invest it. I'm senior
S1: economics writer Jess Irvine.
S2: And I'm money and a dumb pal. And just as
S2: Michael Bublé once said in his 2011 Christmas album, it's
S2: beginning to feel a lot like Christmas.
S1: It is. Did he sing it or did he croon it?
S2: He crooned it. He definitely crooned it.
S1: He's a bit of a creator. I love it. He's
S1: hitting me up in the mail. My Spotify ads seem
S1: to be Bublé related.
S2: On that note, this episode today does have a bit
S2: of a Christmas Eve theme because we're going to talk
S2: about how you can save a bit of money around
S2: the festive season in all sort of different shapes and
S2: sizes and forms. And just if you bought your Christmas
S2: gifts yet, are you an early gift buyer?
S1: I've done a bit of it. I'd love to. I'd
S1: love to say that I did what I gave advice
S1: to everyone to do, which was to sort of buy
S1: everything in the Black Friday sales. And I do have
S1: a friend who sort of that weekend said, I'm done.
S1: I've bought every single, single gift that I needed that
S1: sort of half price off. And I did not do that.
S1: I have I'm not sure about the average age of
S1: the listeners of our podcast, but I am in close
S1: contact with Santa because I have a son. And so
S1: we're in direct liaison in terms of what goods will
S1: be delivered from the North Pole this year and which
S1: ones I'm directly responsible for, for getting in. There's still
S1: some last minute requests coming in. So managing that flow,
S1: that's where I'm at. So I've bought a few things,
S1: got a few things I need to tell Santa still
S1: to procure. But how about you?
S2: I'm a really terrible gift buyer. Like, I'm. I'm like,
S2: you know, sorry to my family who does listen to
S2: this podcast, but I'm like a real last minute, sort
S2: of like, you know what? What do I get this year?
S2: I feel like I've been actually a little bit better
S2: than usual. Like, sometimes I will quite literally do things
S2: like the last week, like you'll see me at High Point, like,
S2: you know, roaming around trying to find gifts. But I've
S2: been I've been a little bit better this year. I've
S2: got I've got my gifts sort of planned out. I'm
S2: feeling I'm feeling good.
S1: Yeah. I have actually followed what is our first piece
S1: of advice about sort of gift giving and managing costs,
S1: which is to talk about it with your family and friends.
S1: So I've actually this year I have texted a couple
S1: of my girlfriends, we've got a group chat, there's two
S1: of us. And I said, Oh, I'll tell people. I'll
S1: just read it out from my phone because I think
S1: that's helpful. The sort of the phraseology about this was
S1: my way of telling them, Hey, I'm not going to
S1: spend a lot of money on you this Christmas. I
S1: said it in a really nice way. I said, Hello, lovelies.
S1: Heads up. I'll be buying you both a little Christmas
S1: present this year in the modest $25 range. Santa's emoji,
S1: Smiley face emoji.
S2: So that's it? That's perfect. That's exactly what you want
S2: to do.
S1: Nothing says love more than a specific monetary value to me.
S2: Yeah, and a couple of emojis.
S1: And a couple of emoji. And so that was well received.
S1: They like, Oh, thanks for letting me know. Yeah, I'll.
S1: I'll do the same for you. So you sort of
S1: just telegraph ahead of time because I did have some
S1: aukey's situations last year where people have bought me presents
S1: and I hadn't bought presents for them yet. So making
S1: a list, figuring out who you're actually going to buy
S1: gifts for is a great place to start, isn't it?
S2: Yeah, absolutely. And I think, as you mentioned, this is
S2: sort of, you know, what we're going to talk about
S2: in terms of some sort of ideas for you to say,
S2: because it is it's been a hard year and it's
S2: been a hard few years and there's a few things
S2: going on in the world. I don't know anyone's noticed,
S2: but there's a couple of things that are happening. And
S2: this means that we don't have as much money as
S2: we may have had in previous years. We won't get
S2: into it. You know, there's a lot of a lot
S2: of things, but generally that means that we're approaching Christmas
S2: and people probably have a little less cash in their
S2: pocket than they might usually. So I think there is
S2: a few things that you can do to sort of
S2: sort of mitigate that or sort of get ahead of that.
S2: But yeah, as I was just sort of mentioned, just
S2: talking about it, I like, you know, I'm I'm blessed
S2: by the fact that I've only got a very small
S2: group of people that I buy gifts for, like it's
S2: pretty much my immediate family and that's it. So I
S2: don't really have to do sort of the awkward like, oh,
S2: is my cousin going to get me get me a
S2: gift this year, anything like that. But I know a
S2: lot of people do. So it is worth one of
S2: those things that it's sort of worth, you know, getting
S2: ahead of and chatting about now.
S1: Yeah. And I feel like the conversation this year is
S1: pretty different because everyone knows we've all been smashed by
S1: the cost of living, by interest rates going up, rents
S1: going up. I feel like there's a different context for
S1: this Christmas to be able to say, Hey, look, my
S1: budget is tight. There's just actually I haven't got a
S1: lot of room in the in the budget this year
S1: to do extravagant gifts. But I'm really looking forward to
S1: spending time with you. And I'd also love to get
S1: you something. But you know, it's going to be that
S1: more modest price range. But hey, what's Christmas about anyway?
S1: It's not about gifts that are going to put me
S1: into bankruptcy. You know, like I feel like there's room
S1: to have a new and conversation about it and an
S1: open and honest one. And it's better to have that conversation.
S1: And I think you might be actually met by relief
S1: if you are the one that initiates that. Yeah, because
S1: everyone's feeling it.
S2: Yeah, absolutely. And also stop. So situations where someone might
S2: get you like a really generous gift and you'd be like,
S2: I just got them like, you know Pam from Coles or.
S2: Something like that. I don't know. It sort of prevents
S2: a situations where there might be a really awkward mismatch
S2: in sort of the level of of money you've spent
S2: on someone to have.
S1: A chat about it with your people that you're going
S1: to give presents to.
S2: And then once you do actually get to the to
S2: the gift giving stage, there's multiple different ways and different
S2: forms that gifts can can bring. Like obviously we're all
S2: fairly conditioned into, I think, you know, the standard gifts
S2: of material objects and, you know, the various different sizes
S2: and expenses and all that sort of stuff. But, you know,
S2: it's broad and vast to the world of gift giving. Yes, it.
S1: Is. You've got to think laterally, Open your minds. And
S1: my favorite piece of gift giving advice comes from economists. And,
S1: you know, I listen to economists way too much. But
S1: the best piece of advice from economists on gift giving
S1: is to give the gift of cash.
S2: So I. I love getting cash. I think there's I
S2: think it's an underrated gift.
S1: I know. I think we've as a society found a
S1: really socially. Okay. Way to do that with gift cards.
S1: You know, somehow it's different if you just hand somebody
S1: a crisp $50 note is somehow different to giving them
S1: a gift card that says $50. Yeah.
S2: Yeah.
S1: It's different and it's okay. And here's a gift cards
S1: this Christmas. And, you know, if people and loved ones
S1: are feeling a bit of the pressure, you can get
S1: gift cards that might go for not just even for
S1: a specific retailer, but like for a shopping center like
S1: Westfield does gift cards. And so you're essentially giving them
S1: 50 bucks or whatever, but they could go spend it.
S1: Maybe if they need to spend it on the groceries,
S1: they can go do that at a Kohl's or Woolies
S1: in the same shopping center. So there's no judgment as
S1: to how they're actually going to spend the money. So
S1: I like that because there was this fantastic American book
S1: by an economist, Joseph Waldfogel, called Scrooge, a nomics, and
S1: he talks about the dead, the dead weight loss of Christmas.
S1: So you had 50 bucks in your pocket and you
S1: went and spent it on 50 bucks of a 50, whatever.
S1: You've just burned that cash into something that the gift
S1: receiver might not value. You know, they might only have
S1: wanted to spend 20 bucks on hand. So you've sort
S1: of created this dead weight loss for society. So the
S1: most efficient thing is to just give the $50 note
S1: to the person to go spend how they want to
S1: spend it. So I would love to normalize that.
S2: I hear this and I and I think it's valid,
S2: but at the same time, it makes me think that
S2: like Christmas with economists is not like the most like,
S2: fun affair. It's just like, you know, everyone sitting around
S2: had each other like $50 notes and being like, Now
S2: don't spend it too quickly. Remember, inflation's going up. You know,
S2: that's it. I mean, I understand the premise of it, but,
S2: you know.
S1: Yeah. So if you're not into that, maybe let's whip
S1: through some other options.
S2: Like, and I think one of the classic ones that
S2: you see, especially for like big families, are like people
S2: who have like really big Christmases, like the Secret Santa
S2: sort of thing or it's like a, you know, $20 limit.
S2: You're not getting anything too wild. And that can be
S2: extended to like, you know, maybe you hadn't haven't done
S2: that with your family in the past. And maybe this
S2: year you go, Hey, maybe we should do this this year, guys,
S2: because that means we can spend a little bit less
S2: money than we usually do, which is always a good option.
S2: And so. GROSS And this can be fun, especially if
S2: you do the one we get to steal the present
S2: from other people.
S1: How does that work?
S2: Like, everyone has a gift and then you can like,
S2: instead of when you get your gift, you can choose
S2: to keep it or you can like steal someone else's.
S2: It gets pretty brutal. I think it's I think it's
S2: maybe only good if it's like a really big group
S2: of people. You wouldn't want to do that with like,
S2: just like your four family members or something like that.
S1: Yeah. Okay. That's. Yeah. So instead of buying a gift
S1: for all four people, whatever, you only have to buy
S1: one gift. Yeah. You save the money. Yeah, I think
S1: that would be a good thing for people to consider
S1: this year. This is another one that maybe makes me
S1: look a bit Scrooge, but I love the idea of have.
S1: And I've never done this, but having setting a free challenge. So, like,
S1: you can only give gifts that you got for free.
S1: And I do have a friend who she said that
S1: they did this like, including like stuff you find on
S1: the curbside, you know, in hard rubbish collection, which I
S1: love going scavenging through. You can join like street bounty
S1: groups on Facebook and they say there's a there's a
S1: hot looking chest of drawers on the corner or whatever.
S1: And then you can go and find the good stuff
S1: or there's like buy nothing. Groups on Facebook or Freecycle
S1: is another one. So I just think that could be
S1: it sort of. It also puts more onus on the
S1: shoppers when you're not shopping, you know, spending money to
S1: like be creative and really person and like think outside
S1: the box. I think that could be fun if you
S1: and then you're not spending any money.
S2: Yeah exactly. And there's I suppose that extends to things
S2: like doing like a handmade gift to Christmas. So that's
S2: usually that's very low cost. Like, yeah, you know, I've
S2: definitely had a few gifts like that in the past,
S2: which are always very nice, is like easily have that
S2: sort of personable sort of special sort of aspect to
S2: it without having spent a lot of money on it.
S1: I love the idea I heard of like you could
S1: get a jar and you could get paddle pop sticks
S1: or whatever pieces of paper and put out, you know,
S1: 12 or one. 52. If you want to do one
S1: per week and like put a little promise on there,
S1: like for your partner to say, I'll take out the
S1: bins for January and that's, you know, or, or not even,
S1: you know, put it to a month but like it
S1: and you pull out a stick and you know it's
S1: redeemable for you do it.
S2: As low as like one of the sixes and say
S2: like I will give you $50 like defeats the entire
S2: purpose of it. Monetary non-monetary gifts. Yes. In the same
S2: sort of vein, I think there's been this big boom
S2: over the past, like I'd say, decade. So giving people
S2: experiences rather than gifts. So like, you know, rather than
S2: giving someone a new phone, you give them like a
S2: hot air balloon ride or something like that. Right. But like,
S2: that can also be like experience is going to be free.
S2: You can be like, I am going to take you
S2: on a lovely bushwalk and we're going to go and
S2: have a lovely bushwalk somewhere together. And that's my Christmas
S2: gift to you. And that's that's like, you know, what
S2: are you paying for that, Like petrol to get there
S2: I suppose, like, you know, but like that's, that's about
S2: it really.
S1: So the thing is if it's like I'm going to
S1: buy you theatre tickets if you were going to do
S1: that anyway, it's sort of just shifting that forward and
S1: rebadging that as a present when it's money you were
S1: probably going to spend to do something together anyway. So
S1: that's kind of cheating.
S2: Yeah, exactly. And we love cheating. So on to some
S2: more sort of like non directly non gif related ideas.
S2: Obviously there's lots of things you can do when it
S2: comes to giving gifts to your family members or your friends.
S2: But Christmas is also just an expensive like day and
S2: like couple of days. Like all the planning are like
S2: lunch is expensive, food is expensive. So there are some
S2: things you can do there. Like you could always do
S2: the classic bring a plate. I've never done it, but
S2: I always say it looks like so much fun. Just like,
S2: you know, everyone that's coming. Just like tell them to
S2: bring a meal. And as long as you don't all
S2: tell them to bring the same meal, you probably have
S2: quite a good little Christmas spread.
S1: Yeah, a little potluck party. You know, somebody you do
S1: the protein, you do the salad, you do the veg,
S1: you do dessert, you do the cheeses. I think that
S1: can work out really well. And that sort of takes
S1: the pressure off the host, whoever's hosting Christmas to incur
S1: all the expense. Because like we know that grocery prices,
S1: the one of the things that are a real pain
S1: point for people, you know, various supply interruptions. So just yeah,
S1: the food related costs of Christmas are so big. I
S1: like that idea. And even, you know, when it comes
S1: to managing that costs, I would say, you know, so
S1: it doesn't just come in one big shop on Christmas
S1: Eve trying to sort of be purchasing some of the
S1: food and, you know, the nonperishable stuff. Look for the proteins.
S1: You know, if you have all this, I don't think
S1: you can freeze prawns or can you? But, you.
S2: Know, you can freeze prawns.
S1: You know, it's like buying some of that protein, you know,
S1: in advance. You know, if you can find some specials
S1: and then freeze it. So just getting ready for the
S1: day so that it's not all going to be this
S1: $500 shop that you do on Christmas Eve because you
S1: got people coming round, getting ahead of it and being
S1: aware of it. I guess either way we're going to eat.
S1: And I think with Christmas this year, like we all
S1: due a little bit of celebration. So we advice that
S1: we're giving, you know, do have a nice Christmas this year, everyone,
S1: because you've earned it.
S2: Absolutely.
S1: I know. But but I also love the vibe in
S1: the spirit of just keeping the costs low and remembering
S1: what it's all about, which is spending time with people
S1: and having some nice food. But you don't have to
S1: have the fanciest of everything.
S2: Yeah, and especially if you like, you feel like a
S2: loyalty points order. You know, your everyday rewards, your flybuys.
S2: This is a great time to sort of cash. I mean,
S2: I realized that I had 20 bucks sitting on my
S2: flybuys I had no idea how I'd entered or when
S2: to get used. It was fantastic. You know, these sort
S2: of things, they just they just accumulate so good time
S2: to cash in that sort of stuff and also do
S2: things like cashback websites are really great and you know,
S2: you're a fan of those. Yes.
S1: Yeah, I am. And this applies to gift giving as well.
S1: You know, you go into sites or apps like Cash
S1: Rewards or Shopback and you check the retailer, but you're
S1: going to you're about to go to and see if
S1: there's like a 20% cashback. And then, you know, you're
S1: essentially reducing the cost of what you're about to buy
S1: and getting access to some discounts that might not be
S1: available in-store. So, yeah, you know, that is all that
S1: all adds up to them as as we know.
S2: Oh, it does all add up. And my, my last
S2: little tip of this was just something that I really
S2: enjoy doing is reusing like the wrapping paper that you've
S2: gotten from like previous gifts. My family's big on this.
S1: I think we've got a vibe going on here. It's
S1: a vibe of just thinking laterally, recycling where you can
S1: keeping the costs down and sort of making it a cheerful,
S1: a cheap but cheerful Christmas for 2022, I think is
S1: in order.
S2: Yeah. And then in terms of like, like I post
S2: Christmas stuff, I think, you know, thinking about the amount
S2: of money you spend on Christmas doesn't necessarily stop at Christmas.
S2: Like obviously extends to something like Boxing Day because it's
S2: like a, you know, a time honored Aussie tradition to
S2: go absolutely hog wild at Boxing Day sales and just
S2: go and, you know, go into Myer and buy half
S2: the store, which you like obviously is a lot of fun.
S2: But I think it's like you can also just like
S2: not do that and just chill out a bit, right?
S1: Like interesting this year to see because there's always that
S1: footage that they run along with people who've camped out
S1: and those that run through the doors. I wonder if
S1: that will happen this year because like the expectations is
S1: that people will be spending big for Christmas, but we're
S1: all aware that we're heading into 2023 with higher mortgages
S1: and cost of living. BE I wonder how crazy will
S1: go in the sales. The advice would be don't.
S2: Say anything else just on your on your list, considering
S2: your you're the great budgeting guru.
S1: Yes. The 100% is. I would just urge people where
S1: we've only just started December. If you haven't done all
S1: your spending just yet, it would be so powerful for
S1: you to keep a list like Santa of all the
S1: stuff that you're buying. So we've discussed, you know, Christmas spending.
S1: It's it's the food, it's the travel, it's the wrapping paper,
S1: it's the cards, it's the decorations. Like the amount of
S1: money we can spend at this time of the year
S1: is quite astounding. If you keep a list of everything
S1: that you spend, you can then tally it up and go, Well,
S1: my family Christmas costs, like, say, if it's 1200 dollars,
S1: I know that now and then maybe next year I
S1: can set aside. That would be a. Hundred dollars per month,
S1: and that will smooth out, you know, you can essentially
S1: save for Christmas in advance without having to do one
S1: of those, you know, online, you know, save up for
S1: a hamper things. You know, you you look after future
S1: you and say, I know Christmas comes every year and
S1: it's always a bit financially tight for me. And I
S1: also think that keeping a track of your spending can
S1: help you to keep a lid on the spending as well.
S1: If you realize, oh, hey, wait a minute, we're up
S1: to $800 that I've spent to you know, if you're
S1: managing a big your family, you know, just that process
S1: of being mindful of what we are spending at this
S1: time of year because, you know, we all want to
S1: have a YOLO kind of Christmas. And, you know, but,
S1: you know, we've got those budgetary pressures that we're coming
S1: up to. So what? This is what I do. I
S1: have like a little worksheet where I, you know, I
S1: figure out Christmas presents for who wrapping whatever the costs
S1: are going to be. And I split it up and
S1: I save for it throughout the year. And I make
S1: sure that I don't invest that money or put it
S1: somewhere else. It's waiting there for me to go. And
S1: that has really helped to reduce the stress around Christmas spending,
S1: which is one of those big lumpy sort of spending periods.
S1: So tracking spending people and yeah, hopefully even if you
S1: are feeling the stress this year, you can come up
S1: with a bit more of an action plan for 2023.
S2: So our listener question this week comes from David, who's
S2: following on from last week's episode that we did on
S2: private health insurance and something that we didn't get time
S2: to mention in that episode was lifetime health cover loading.
S2: Just do you want to talk through about what that
S2: is and why people need to know about it?
S1: Yeah. This is actually a really important one and I'm
S1: glad that we get a chance to raise it. Now,
S1: if you're looking at whether to take up private health insurance,
S1: something that is really relevant for people at about the
S1: age of 30 is to consider whether they that is
S1: the point where you want to take out the cover,
S1: because if you don't for every year after your 30,
S1: there is a lifetime health cover loading that starts to
S1: apply to your premiums. If you subsequently then do take
S1: out private health insurance. And that kicks in at a
S1: rate of 2% loading on top of your premium for
S1: every year aged over 30. So by the time you're 40,
S1: if you were to take out private health insurance and
S1: had not had it previously, you could be paying an
S1: extra 20% per year of the cost of your premiums.
S1: And that would apply to you for a ten year period.
S1: So it can really hit people who don't have the
S1: cover from age 30. And it's designed to encourage people
S1: to get the cover from the age of 30 and
S1: to keep it. But yeah, you can really be hit
S1: with some higher premium costs if you don't have it.
S1: I would just say that for people who, you know,
S1: it's it's there to scare you into getting private health
S1: insurance if you're below the Medicare levy thresholds where you're
S1: not going to be slugged extra tax for not having
S1: private health insurance. And if you're never going to want
S1: private health insurance, don't be scared by this into taking
S1: it out, because then you'll be paying for premiums that
S1: you don't want and you don't need. And so it
S1: is a calculation for everyone to sort of think about.
S1: And some people may not want to take out private
S1: health insurance until they're 60. So you could have 30
S1: years of paying no health insurance premiums. Yes. When you're 60,
S1: you'd be slugged with a much higher you know, your
S1: premiums might not be $1,000 a year. They could be
S1: closer to $2,000. But you can do the sums. For
S1: some people, you may still be better off by just
S1: not having the cover when you didn't need it and
S1: then wearing the higher lifetime health cover loading for the
S1: ten years until it drops off. It is something for
S1: people to be aware of and have a little Google
S1: about whether that would apply to you. If you're someone
S1: who you don't have cover now, you're getting to your
S1: late twenties, early thirties. Maybe it might be worth looking
S1: at whether you do want to get the cover just
S1: a couple of years earlier to avoid paying that. And
S1: just finally, I want to give you a budget tip
S1: of the week, as I always do. I came across
S1: this really interesting finding, a US survey of people about
S1: their subscriptions, and people were asked like, how much do
S1: you think you spend each month on subscriptions? And the
S1: average response was like way under what they actually spent.
S1: They sort of estimated, I think I spent about $86.
S1: That would be US dollars. But actually, when they got
S1: people to go through and fess up and look at
S1: this site, this is how much they actually spend. It
S1: was more like $219. So basically, people have absolutely no
S1: clue how many subscriptions they've got. And 42% of people
S1: have found subscriptions that they just had forgotten that they
S1: were doing. So subscription costs. My number one tip is
S1: to cancel your subscriptions as soon as you get them.
S1: So some of them this doesn't work because they then
S1: cancel the product. But most of them you say, okay, well,
S1: I'm signing up. Okay, you're forcing me to give you
S1: the credit card details. But after this month, I really
S1: I'm not sure I'm going to want it. You just
S1: sign up and cancel straightaway. And that's a little love
S1: letter to future you to say this is going to
S1: cut out after a month. And if you still want it,
S1: you can sign back up again. But otherwise, he's a
S1: subscription that I'm not just going to forget about and
S1: have on going for the rest of my life. So
S1: just cancel straight away.
S2: I got a little sub tip for this is getting
S2: a bank account or a banking app that notifies you
S2: when money goes in or out of your account. I
S2: just I feel like this should be standard. I know
S2: a lot of banks don't do it, but like the
S2: bank that I'm with, you know, any time I get
S2: debited for anything, I get a notification on my phone
S2: that says, you know, $17 has been taken out of
S2: your account for full membership or whatever like that. And
S2: it's great because you never have any surprise subscription costs
S2: because you see everything that's happening. And if something pops
S2: up that goes like and you get a notification, be like,
S2: you know, 20 bucks is taken out of this. Be like, oh,
S2: you know, I'm still subscribed to that. And you go
S2: and cancel it. So there's no there's no surprises when
S2: you open up your bank account because everything's you're being
S2: notified about everything.
S1: That's great. I usually hate notifications on those things, like
S1: you got an Instagram message, whatever. I have them turned off.
S1: But yeah, you should know if money's coming out of
S1: your account.
S2: Absolutely.
S1: Merry Christmas, everyone. I guess just to wrap that up,
S1: keep it cheap and cheerful this year would be our
S1: overall advice. You know, look. Look for some lateral ways
S1: to have fun this Christmas. Thanks, Jim, as always. Merry
S1: Christmas to you.
S2: Merry Christmas. And I'll see you next week.
S1: See you next week.
S2: This episode of It All Adds Up was produced by
S2: Chai Wang. The information discussed is general in nature and
S2: does not take into account your personal financial situation, goals
S2: or objectives. You should always do your own research or
S2: get professional advice before making any major financial decisions. If
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S2: Thanks for listening.