How much do you think the average Aussie spends on gifts each month? $20, $50 or 100? (hint: we’re a generous bunch). Today we’ll look at why it’s important to budget for these expenses correctly, rather than succumbing to ‘buy now, pay later’ services.

Did you know Australians spend nearly $20 billion a year on gifts?

That’s about $1,200 each per year, or $100 a month, according to a new research report by the Financial Planning Association of Australia (FPA).

It turns out that Gen Y is by far the most generous age bracket (25-39), spending $130 on gifts each month, well ahead of Gen Z ($91), Boomers ($89) and Gen X ($87).

The importance of budgeting for gifts

Ok, so here’s where this feel-good story starts to get a tad concerning: three in four Australians (73%) do not budget for gifts at all.

Now, with the average gift costing between $66 and $137 (depending on the occasion), that’s enough for some households to turn to ‘buy now, pay later’ services.

And make no mistake: these ‘buy now, pay later’ services are booming.

In fact, in the 12 months to January 2019, 1.59 million Australians used one of the latest ‘buy-now-pay-later’ digital payment methods, with a whopping 40.6% of its customers being Millennials.

That’s right – Millennials, who are not only by far the most generous gift-givers, but are also seeking to enter the mortgage market for the first time.

So what’s the big deal?

According to recent media reports, lenders are increasingly trawling through bank statements for evidence of outstanding ‘buy now, pay later’ accounts when prospective borrowers apply for a loan.

In one incident, a 21-year-old NSW woman said a couple of hundred dollars worth of Zip Pay purchases, all of which had been paid off, almost prevented her from getting a bank loan to buy her first car.

“I honestly never thought it would impact me being able to get a loan. I am now petrified of using it at all, as I really want a house,” she said.

In another incident, a big 4 bank knocked back a 26-year-old Perth woman’s mortgage application after discovering she had an outstanding Afterpay balance.

These are just two examples of the importance of making sure you factor gifts into your monthly budget to ensure you aren’t setting off a lender’s warning bell by using ‘buy now, pay later’ services.

Need help getting your accounts in order?

If you’ve used a ‘buy now, pay later’ service to buy a gift for a friend, family member or even yourself, there are steps you can take to help minimise the impact it might have on your next loan application.

Your most obvious course of action is to pay it off as soon as you can, and then avoid using the service again in the future.

And look, let’s be honest, no one likes a Scrooge, so your next step would be to ensure you’re including an allocated (and realistic) amount for gifts in your monthly household budget moving forward.

If you’d like to know more, or want a hand getting your monthly budget in order before applying for finance, then get in touch – we’d love to help out.

As technology continues to evolve, so too do the challenges of keeping your family budget in check. This week we’re going to look at a couple of technological trends that could put your family budget under some real strain.

Sure, having everything there at the click of a button these days is convenient. But convenient isn’t free.

In fact, it can blow out your annual family budget by thousands of dollars each year, which can put strain on more important bills such as your mortgage and utilities.

Below we’ll explore a couple of the technological trends that are really starting to chew up more and more of the average Australian household budget.

1. Uber eats and other food delivery apps

Remember the good old days when you used to ring up your local Thai restaurant and place an order directly with the store?

Sure, you’d have to pick it up, but you paid less and the restaurant got the full cut.

Those days seem long gone since Uber Eats, Deliveroo, Menulog and other food delivery services burst onto the scene.

These days you pay about $5 extra each time you order through Uber Eats, and they claim about a 35% commission.

But it’s not just the extra expense per meal. The thing about these apps is that they make it all too tempting to skip making dinner and order takeaway instead.

More than half of Australians are now struggling to plan and cook meals and turn to these apps instead, according to a survey by Australian Beef, and it’s costing an extra $4000 per year in some cases.

The solution? Spend more time cooking fresh food instead. Rather than thinking of it as a chore, consider it an option to spend more time participating in an activity with your loved ones.

It’s cheaper, healthier and more fun!

2. Entertainment subscriptions

Video and music streaming subscriptions services have exploded in popularity over the last two to three years.

Entertainment giants have realised that the best source of revenue is recurring revenue, so they’re all climbing over one another to win over your hard earned cash.

One or two subscription services obviously won’t have too big of an impact on your bottom line (in fact it may even save you money), however problems start arising if you subscribe to a number of them.

For example, there’s Netflix ($18/month), Stan ($17), Foxtel ($50), Kayo ($25), Spotify ($12) and 10 All Access ($10), to name but a few.

Taking out just Netflix and Spotify would cost you $360 a year – about a dollar a day.

Subscribe to the whole lot however and you’re looking at an extra $1200, not to mention any other services family members may subscribe to such as Xbox Live, Podcasts, Youtube Premium, Twitch and Amazon’s Audible.

Long story short: they can add up very quickly!

The solution? Stick to your favourite one or two.

There’s plenty of free entertainment options out there, such as ABC iview and SBS on Demand.

And sure, it might be a bit old fashioned, but your local library is free and offers an endless stream of entertainment.

Final word

Don’t get us wrong: we’re definitely not saying you should shun technology altogether. After all, it makes everything much more convenient.

Rather, instead of the technology harnessing you, harness it instead.

If you use it wisely and in small doses you can get the best of both worlds: an enjoyable today and a well-funded future.