Aussies tighten wallets this festive season

According to the latest spending data provided by NAB and the Commonwealth Bank (CBA), Australians are making astute decisions to stretch their money further this Christmas amid the escalating cost of living.

Indeed, this scenario unfolds against the backdrop of inflation reaching a year-end peak of 5.4 per cent, with those holding a mortgage particularly affected, grappling with the impact of the 4.35 per cent cash rate.

Fresh insights from NAB revealed that six in 10 Australians are ‘extremely likely’ to alter their spending patterns this Christmas to better manage the increased living costs.

This adjustment may involve relying on loyalty programs to accumulate rewards points, opting for lower-priced brands or products or completing their shopping early to capitalise on significant sales and discounts.

NAB’s personal banking executive Kylie Young emphasised that with ongoing high living costs, Australians are diligently seeking out bargains and discounts.

She highlighted: “People are also closely monitoring their finances to control or track expenses and avoid exceeding their budgets.

“Customers with Christmas-related goals in the NAB app are aiming to save on average $3,000 by the end of 2023.”

Moreover, more individuals are actively checking their spending tracker on the NAB app and Internet Banking in November and December compared to other months, enabling them to navigate their festive spending, she observed.

Observing changing spending habits, Ben Williams, a Mortgage Choice broker in Melbourne, said it’s a challenging time to save, especially while paying high rents and attempting to save for a house.

Mr Williams said many have opted to move back in with family to save money.

With the high cost of living and mortgages, he added a lot of people are still looking into refinancing.

“People are needing brokers more than ever at the moment,” Mr Williams said.

Consumer research conducted by the Commonwealth Bank revealed a surge in interest among people, particularly those aged 39 and under, in shopping during the Boxing Day sales.

This trend corresponded to earlier data from CBA’s cost-of-living report, indicating that younger Australians are particularly affected by rising prices.

The report showcased a 5.1 per cent decline in total spending among 25–29-year-olds.

CBA chief economist Stephen Halmarick said people are also using the sales to stock up on essentials – with essential spending edging up 0.3 per cent.

“Essential spending usually falls after the ‘gift giving’ period. However given consumers are clearly seeking sales bargains for both essential and discretionary items, Boxing Day sales could also see a similar trend with a larger share of essential spending,” Mr Halmarick said.

CBA’s personal finance expert Jess Irvine added: “Aussie household budgets are being squeezed on multiple fronts, so it is not surprising that individual shoppers are tightening their belts. While most economists do not expect the Reserve Bank to raise interest rates much further, the cumulative effect of rising costs so far is being felt.”

[Related: Borrowers get creative amid challenges]