SPEND OR SAVE?

So how did you change your lifestyle last year?  Some people lost their jobs. Some people had their hours cut. Many were forced to use up accumulated leave – when you couldn’t really afford a holiday. Some people couldn’t retire, as planned, because superannuation pools had evaporated. So how did you adapt? Well, I’ll tell you what you did and didn’t do, to tighten your family’s belt. And see if I am right.

You spent less money on cigarettes and tobacco –if you are a smoker. You spent less money on alcohol. Less money on recreation and cultural activities. Less money in hotels and cafes and restaurants.

What did you spend more on?  You spent a bit more on food – because supermarket prices kept going up. More on communications like the ubiquitous mobile phones and text messages. A bit more on clothing and household equipment. And heaps more on health. More than 4% more on health. And that will go up even more this year with private health insurance premiums up again.

More money spent on prescription drugs but also more, I hope this is true, on getting healthier. Losing some weight. Doing some exercise. Especially for Baby Boomers.

Maybe it’s indicative and encouraging that one retail chain that has bucked the downward trend as we slide into a recession is The Athlete’s Foot. Their sports shoe business was up 220% in January without discounting.

All these facts and figures, with some Hinch interpretations, come from the Australian Bureau of Statistics.

Most of all, as many of us predicted, you held on the goodies that Santa Claus Rudd dished out for Xmas. Some spent a bit but most people saved it for the proverbial rainy day.

Some would have gone to pay Xmas-New Year credit card expenses.

The Spend or Save question is an interesting dilemma. A year ago Wayne Swan was saying inflation was the evil genie that had escaped from the bottle. Then came the deliberately inflationary multi-billion dollar handouts in December and February.  Go figure.

Their message: spend up, buy a car, kick-start the factories, save jobs.

Tandberg summed it up well in The Age today. A couple staring in a shop window. He’s thinking ‘Save in case we lose our jobs’. She’s thinking ‘Spend so we don’t lose our jobs’.  Who is right?

Thursday, March 5, 2009

© Copyright Derryn Hinch 2009