Hello and welcome to It All Adds Up the podcast where we chat about money, how to get it, how to spend it and how to invest it. I'm senior economics writer Jess Irvine.
And I'm money and a dumb pal. And just as Michael Bublé once said in his 2011 Christmas album, it's beginning to feel a lot like Christmas.
It is. Did he sing it or did he croon it?
He crooned it. He definitely crooned it.
He's a bit of a creator. I love it. He's hitting me up in the mail. My Spotify ads seem to be Bublé related.
On that note, this episode today does have a bit of a Christmas Eve theme because we're going to talk about how you can save a bit of money around the festive season in all sort of different shapes and sizes and forms. And just if you bought your Christmas gifts yet, are you an early gift buyer?
I've done a bit of it. I'd love to. I'd love to say that I did what I gave advice to everyone to do, which was to sort of buy everything in the Black Friday sales. And I do have a friend who sort of that weekend said, I'm done. I've bought every single, single gift that I needed that sort of half price off. And I did not do that. I have I'm not sure about the average age of the listeners of our podcast, but I am in close
contact with Santa because I have a son. And so we're in direct liaison in terms of what goods will be delivered from the North Pole this year and which ones I'm directly responsible for, for getting in. There's still some last minute requests coming in. So managing that flow, that's where I'm at. So I've bought a few things, got a few things I need to tell Santa still to procure. But how about you?
I'm a really terrible gift buyer. Like, I'm. I'm like, you know, sorry to my family who does listen to this podcast, but I'm like a real last minute, sort of like, you know what? What do I get this year? I feel like I've been actually a little bit better than usual. Like, sometimes I will quite literally do things like the last week, like you'll see me at High Point, like, you know, roaming around trying to find gifts. But I've been I've been a little bit better this year. I've
got I've got my gifts sort of planned out. I'm feeling I'm feeling good.
Yeah. I have actually followed what is our first piece of advice about sort of gift giving and managing costs, which is to talk about it with your family and friends. So I've actually this year I have texted a couple of my girlfriends, we've got a group chat, there's two of us. And I said, Oh, I'll tell people. I'll just read it out from my phone because I think that's helpful. The sort of the phraseology about this was my way of telling them, Hey, I'm not going to
spend a lot of money on you this Christmas. I said it in a really nice way. I said, Hello, lovelies. Heads up. I'll be buying you both a little Christmas present this year in the modest $25 range. Santa's emoji, Smiley face emoji.
So that's it? That's perfect. That's exactly what you want to do.
Nothing says love more than a specific monetary value to me.
Yeah, and a couple of emojis.
And a couple of emoji. And so that was well received. They like, Oh, thanks for letting me know. Yeah, I'll. I'll do the same for you. So you sort of just telegraph ahead of time because I did have some aukey's situations last year where people have bought me presents and I hadn't bought presents for them yet. So making a list, figuring out who you're actually going to buy gifts for is a great place to start, isn't it?
Yeah, absolutely. And I think, as you mentioned, this is sort of, you know, what we're going to talk about in terms of some sort of ideas for you to say, because it is it's been a hard year and it's been a hard few years and there's a few things going on in the world. I don't know anyone's noticed, but there's a couple of things that are happening. And this means that we don't have as much money as we may have had in previous years. We won't get
into it. You know, there's a lot of a lot of things, but generally that means that we're approaching Christmas and people probably have a little less cash in their pocket than they might usually. So I think there is a few things that you can do to sort of sort of mitigate that or sort of get ahead of that. But yeah, as I was just sort of mentioned, just talking about it, I like, you know, I'm I'm blessed by the fact that I've only got a very small group of people that I buy gifts for, like it's
pretty much my immediate family and that's it. So I don't really have to do sort of the awkward like, oh, is my cousin going to get me get me a gift this year, anything like that. But I know a lot of people do. So it is worth one of those things that it's sort of worth, you know, getting ahead of and chatting about now.
Yeah. And I feel like the conversation this year is pretty different because everyone knows we've all been smashed by the cost of living, by interest rates going up, rents going up. I feel like there's a different context for this Christmas to be able to say, Hey, look, my budget is tight. There's just actually I haven't got a lot of room in the in the budget this year to do extravagant gifts. But I'm really looking forward to spending time with you. And I'd also love to get
you something. But you know, it's going to be that more modest price range. But hey, what's Christmas about anyway? It's not about gifts that are going to put me into bankruptcy. You know, like I feel like there's room to have a new and conversation about it and an open and honest one. And it's better to have that conversation. And I think you might be actually met by relief if you are the one that initiates that. Yeah, because everyone's feeling it.
Yeah, absolutely. And also stop. So situations where someone might get you like a really generous gift and you'd be like, I just got them like, you know Pam from Coles or. Something like that. I don't know. It sort of prevents a situations where there might be a really awkward mismatch in sort of the level of of money you've spent on someone to have.
A chat about it with your people that you're going to give presents to.
And then once you do actually get to the to the gift giving stage, there's multiple different ways and different forms that gifts can can bring. Like obviously we're all fairly conditioned into, I think, you know, the standard gifts of material objects and, you know, the various different sizes and expenses and all that sort of stuff. But, you know, it's broad and vast to the world of gift giving. Yes, it.
Is. You've got to think laterally, Open your minds. And my favorite piece of gift giving advice comes from economists. And, you know, I listen to economists way too much. But the best piece of advice from economists on gift giving is to give the gift of cash.
So I. I love getting cash. I think there's I think it's an underrated gift.
I know. I think we've as a society found a really socially. Okay. Way to do that with gift cards. You know, somehow it's different if you just hand somebody a crisp $50 note is somehow different to giving them a gift card that says $50. Yeah.
Yeah.
It's different and it's okay. And here's a gift cards this Christmas. And, you know, if people and loved ones are feeling a bit of the pressure, you can get gift cards that might go for not just even for a specific retailer, but like for a shopping center like Westfield does gift cards. And so you're essentially giving them 50 bucks or whatever, but they could go spend it. Maybe if they need to spend it on the groceries, they can go do that at a Kohl's or Woolies
in the same shopping center. So there's no judgment as to how they're actually going to spend the money. So I like that because there was this fantastic American book by an economist, Joseph Waldfogel, called Scrooge, a nomics, and he talks about the dead, the dead weight loss of Christmas. So you had 50 bucks in your pocket and you went and spent it on 50 bucks of a 50, whatever. You've just burned that cash into something that the gift receiver might not value. You know, they might only have
wanted to spend 20 bucks on hand. So you've sort of created this dead weight loss for society. So the most efficient thing is to just give the $50 note to the person to go spend how they want to spend it. So I would love to normalize that.
I hear this and I and I think it's valid, but at the same time, it makes me think that like Christmas with economists is not like the most like, fun affair. It's just like, you know, everyone sitting around had each other like $50 notes and being like, Now don't spend it too quickly. Remember, inflation's going up. You know, that's it. I mean, I understand the premise of it, but, you know.
Yeah. So if you're not into that, maybe let's whip through some other options.
Like, and I think one of the classic ones that you see, especially for like big families, are like people who have like really big Christmases, like the Secret Santa sort of thing or it's like a, you know, $20 limit. You're not getting anything too wild. And that can be extended to like, you know, maybe you hadn't haven't done
that with your family in the past. And maybe this year you go, Hey, maybe we should do this this year, guys, because that means we can spend a little bit less money than we usually do, which is always a good option. And so. GROSS And this can be fun, especially if you do the one we get to steal the present from other people.
How does that work?
Like, everyone has a gift and then you can like, instead of when you get your gift, you can choose to keep it or you can like steal someone else's. It gets pretty brutal. I think it's I think it's maybe only good if it's like a really big group of people. You wouldn't want to do that with like, just like your four family members or something like that.
Yeah. Okay. That's. Yeah. So instead of buying a gift for all four people, whatever, you only have to buy one gift. Yeah. You save the money. Yeah, I think that would be a good thing for people to consider this year. This is another one that maybe makes me look a bit Scrooge, but I love the idea of have. And I've never done this, but having setting a free challenge. So, like, you can only give gifts that you got for free.
And I do have a friend who she said that they did this like, including like stuff you find on the curbside, you know, in hard rubbish collection, which I love going scavenging through. You can join like street bounty groups on Facebook and they say there's a there's a hot looking chest of drawers on the corner or whatever. And then you can go and find the good stuff or there's like buy nothing. Groups on Facebook or Freecycle is another one. So I just think that could be
it sort of. It also puts more onus on the shoppers when you're not shopping, you know, spending money to like be creative and really person and like think outside the box. I think that could be fun if you and then you're not spending any money.
Yeah exactly. And there's I suppose that extends to things like doing like a handmade gift to Christmas. So that's usually that's very low cost. Like, yeah, you know, I've definitely had a few gifts like that in the past, which are always very nice, is like easily have that sort of personable sort of special sort of aspect to it without having spent a lot of money on it.
I love the idea I heard of like you could get a jar and you could get paddle pop sticks or whatever pieces of paper and put out, you know, 12 or one. 52. If you want to do one per week and like put a little promise on there, like for your partner to say, I'll take out the bins for January and that's, you know, or, or not even, you know, put it to a month but like it and you pull out a stick and you know it's redeemable for you do it.
As low as like one of the sixes and say like I will give you $50 like defeats the entire purpose of it. Monetary non-monetary gifts. Yes. In the same sort of vein, I think there's been this big boom over the past, like I'd say, decade. So giving people experiences rather than gifts. So like, you know, rather than giving someone a new phone, you give them like a hot air balloon ride or something like that. Right. But like, that can also be like experience is going to be free.
You can be like, I am going to take you on a lovely bushwalk and we're going to go and have a lovely bushwalk somewhere together. And that's my Christmas gift to you. And that's that's like, you know, what are you paying for that, Like petrol to get there I suppose, like, you know, but like that's, that's about it really.
So the thing is if it's like I'm going to buy you theatre tickets if you were going to do that anyway, it's sort of just shifting that forward and rebadging that as a present when it's money you were probably going to spend to do something together anyway. So that's kind of cheating.
Yeah, exactly. And we love cheating. So on to some more sort of like non directly non gif related ideas. Obviously there's lots of things you can do when it comes to giving gifts to your family members or your friends. But Christmas is also just an expensive like day and like couple of days. Like all the planning are like lunch is expensive, food is expensive. So there are some things you can do there. Like you could always do the classic bring a plate. I've never done it, but
I always say it looks like so much fun. Just like, you know, everyone that's coming. Just like tell them to bring a meal. And as long as you don't all tell them to bring the same meal, you probably have quite a good little Christmas spread.
Yeah, a little potluck party. You know, somebody you do the protein, you do the salad, you do the veg, you do dessert, you do the cheeses. I think that can work out really well. And that sort of takes the pressure off the host, whoever's hosting Christmas to incur all the expense. Because like we know that grocery prices, the one of the things that are a real pain point for people, you know, various supply interruptions. So just yeah, the food related costs of Christmas are so big. I
like that idea. And even, you know, when it comes to managing that costs, I would say, you know, so it doesn't just come in one big shop on Christmas Eve trying to sort of be purchasing some of the food and, you know, the nonperishable stuff. Look for the proteins. You know, if you have all this, I don't think you can freeze prawns or can you? But, you.
Know, you can freeze prawns.
You know, it's like buying some of that protein, you know, in advance. You know, if you can find some specials and then freeze it. So just getting ready for the day so that it's not all going to be this $500 shop that you do on Christmas Eve because you got people coming round, getting ahead of it and being aware of it. I guess either way we're going to eat. And I think with Christmas this year, like we all
due a little bit of celebration. So we advice that we're giving, you know, do have a nice Christmas this year, everyone, because you've earned it.
Absolutely.
I know. But but I also love the vibe in the spirit of just keeping the costs low and remembering what it's all about, which is spending time with people and having some nice food. But you don't have to have the fanciest of everything.
Yeah, and especially if you like, you feel like a loyalty points order. You know, your everyday rewards, your flybuys. This is a great time to sort of cash. I mean, I realized that I had 20 bucks sitting on my flybuys I had no idea how I'd entered or when to get used. It was fantastic. You know, these sort of things, they just they just accumulate so good time to cash in that sort of stuff and also do things like cashback websites are really great and you know, you're a fan of those. Yes.
Yeah, I am. And this applies to gift giving as well. You know, you go into sites or apps like Cash Rewards or Shopback and you check the retailer, but you're going to you're about to go to and see if there's like a 20% cashback. And then, you know, you're essentially reducing the cost of what you're about to buy and getting access to some discounts that might not be available in-store. So, yeah, you know, that is all that all adds up to them as as we know.
Oh, it does all add up. And my, my last little tip of this was just something that I really enjoy doing is reusing like the wrapping paper that you've gotten from like previous gifts. My family's big on this.
I think we've got a vibe going on here. It's a vibe of just thinking laterally, recycling where you can keeping the costs down and sort of making it a cheerful, a cheap but cheerful Christmas for 2022, I think is in order.
Yeah. And then in terms of like, like I post Christmas stuff, I think, you know, thinking about the amount of money you spend on Christmas doesn't necessarily stop at Christmas. Like obviously extends to something like Boxing Day because it's like a, you know, a time honored Aussie tradition to go absolutely hog wild at Boxing Day sales and just go and, you know, go into Myer and buy half the store, which you like obviously is a lot of fun.
But I think it's like you can also just like not do that and just chill out a bit, right?
Like interesting this year to see because there's always that footage that they run along with people who've camped out and those that run through the doors. I wonder if that will happen this year because like the expectations is that people will be spending big for Christmas, but we're all aware that we're heading into 2023 with higher mortgages and cost of living. BE I wonder how crazy will go in the sales. The advice would be don't.
Say anything else just on your on your list, considering your you're the great budgeting guru.
Yes. The 100% is. I would just urge people where we've only just started December. If you haven't done all your spending just yet, it would be so powerful for you to keep a list like Santa of all the stuff that you're buying. So we've discussed, you know, Christmas spending. It's it's the food, it's the travel, it's the wrapping paper, it's the cards, it's the decorations. Like the amount of money we can spend at this time of the year
is quite astounding. If you keep a list of everything that you spend, you can then tally it up and go, Well, my family Christmas costs, like, say, if it's 1200 dollars, I know that now and then maybe next year I can set aside. That would be a. Hundred dollars per month, and that will smooth out, you know, you can essentially save for Christmas in advance without having to do one of those, you know, online, you know, save up for
a hamper things. You know, you you look after future you and say, I know Christmas comes every year and it's always a bit financially tight for me. And I also think that keeping a track of your spending can help you to keep a lid on the spending as well.
If you realize, oh, hey, wait a minute, we're up to $800 that I've spent to you know, if you're managing a big your family, you know, just that process of being mindful of what we are spending at this time of year because, you know, we all want to have a YOLO kind of Christmas. And, you know, but, you know, we've got those budgetary pressures that we're coming
up to. So what? This is what I do. I have like a little worksheet where I, you know, I figure out Christmas presents for who wrapping whatever the costs are going to be. And I split it up and I save for it throughout the year. And I make sure that I don't invest that money or put it somewhere else. It's waiting there for me to go. And that has really helped to reduce the stress around Christmas spending, which is one of those big lumpy sort of spending periods.
So tracking spending people and yeah, hopefully even if you are feeling the stress this year, you can come up with a bit more of an action plan for 2023.
So our listener question this week comes from David, who's following on from last week's episode that we did on private health insurance and something that we didn't get time to mention in that episode was lifetime health cover loading. Just do you want to talk through about what that is and why people need to know about it?
Yeah. This is actually a really important one and I'm glad that we get a chance to raise it. Now, if you're looking at whether to take up private health insurance, something that is really relevant for people at about the age of 30 is to consider whether they that is the point where you want to take out the cover, because if you don't for every year after your 30, there is a lifetime health cover loading that starts to apply to your premiums. If you subsequently then do take
out private health insurance. And that kicks in at a rate of 2% loading on top of your premium for every year aged over 30. So by the time you're 40, if you were to take out private health insurance and had not had it previously, you could be paying an extra 20% per year of the cost of your premiums. And that would apply to you for a ten year period. So it can really hit people who don't have the cover from age 30. And it's designed to encourage people to get the cover from the age of 30 and
to keep it. But yeah, you can really be hit with some higher premium costs if you don't have it. I would just say that for people who, you know, it's it's there to scare you into getting private health insurance if you're below the Medicare levy thresholds where you're not going to be slugged extra tax for not having private health insurance. And if you're never going to want private health insurance, don't be scared by this into taking it out, because then you'll be paying for premiums that
you don't want and you don't need. And so it is a calculation for everyone to sort of think about. And some people may not want to take out private health insurance until they're 60. So you could have 30 years of paying no health insurance premiums. Yes. When you're 60, you'd be slugged with a much higher you know, your premiums might not be $1,000 a year. They could be
closer to $2,000. But you can do the sums. For some people, you may still be better off by just not having the cover when you didn't need it and then wearing the higher lifetime health cover loading for the ten years until it drops off. It is something for people to be aware of and have a little Google about whether that would apply to you. If you're someone who you don't have cover now, you're getting to your
late twenties, early thirties. Maybe it might be worth looking at whether you do want to get the cover just a couple of years earlier to avoid paying that. And just finally, I want to give you a budget tip of the week, as I always do. I came across this really interesting finding, a US survey of people about their subscriptions, and people were asked like, how much do you think you spend each month on subscriptions? And the average response was like way under what they actually spent.
They sort of estimated, I think I spent about $86. That would be US dollars. But actually, when they got people to go through and fess up and look at this site, this is how much they actually spend. It was more like $219. So basically, people have absolutely no clue how many subscriptions they've got. And 42% of people have found subscriptions that they just had forgotten that they were doing. So subscription costs. My number one tip is to cancel your subscriptions as soon as you get them.
So some of them this doesn't work because they then cancel the product. But most of them you say, okay, well, I'm signing up. Okay, you're forcing me to give you the credit card details. But after this month, I really I'm not sure I'm going to want it. You just sign up and cancel straightaway. And that's a little love letter to future you to say this is going to cut out after a month. And if you still want it,
you can sign back up again. But otherwise, he's a subscription that I'm not just going to forget about and have on going for the rest of my life. So just cancel straight away.
I got a little sub tip for this is getting a bank account or a banking app that notifies you when money goes in or out of your account. I just I feel like this should be standard. I know a lot of banks don't do it, but like the bank that I'm with, you know, any time I get debited for anything, I get a notification on my phone that says, you know, $17 has been taken out of your account for full membership or whatever like that. And it's great because you never have any surprise subscription costs
because you see everything that's happening. And if something pops up that goes like and you get a notification, be like, you know, 20 bucks is taken out of this. Be like, oh, you know, I'm still subscribed to that. And you go and cancel it. So there's no there's no surprises when you open up your bank account because everything's you're being notified about everything.
That's great. I usually hate notifications on those things, like you got an Instagram message, whatever. I have them turned off. But yeah, you should know if money's coming out of your account.
Absolutely.
Merry Christmas, everyone. I guess just to wrap that up, keep it cheap and cheerful this year would be our overall advice. You know, look. Look for some lateral ways to have fun this Christmas. Thanks, Jim, as always. Merry Christmas to you.
Merry Christmas. And I'll see you next week.
See you next week.
This episode of It All Adds Up was produced by Chai Wang. The information discussed is general in nature and does not take into account your personal financial situation, goals or objectives. You should always do your own research or get professional advice before making any major financial decisions. If you like today's episode, hit follow a new podcast app. Leave a review and recommend it to all your friends. You can also submit your listener questions in text or
audio form at. It all adds up at 9:00 PM today. Thanks for listening.