The cost of living crisis could see Australians paying for essentials for friends and family, rather than exchanging traditional gifts this Christmas.
It comes as Australians increasingly turn to loved ones to pay their bills in the lead-up to the festive season, according to data from social-impact-focused financial tech company HelpPay.
HelpPay has seen a record $1.539 million worth of debt and bills go through its app, highlighting a social issue which will only intensify in the coming months, according to the app’s co-founder Rowan Wilde.
“If you want to give a really meaningful gift this year – people don’t necessarily need more stuff, they need more financial security,” Mr Wilde said.
“Offering to pay a bill may be the best gift of all.”
HelpPay works by allowing those struggling to pay their bills to share links to their essential costs with friends, family and even strangers, who can then put money towards it.
The majority of bills which have been paid through HelpPay are for essentials, with electricity bills making up over a third of those on the app after a sharp rise in costs.
Some have even used the service to pay for medical bills and rent, with “thousands of dollars” worth of invoices for surgeries processed, according to Mr Wilde.
With essential costs mounting, there are concerns people will “overspend” on gifts this Christmas, according to Melbourne Institute of Applied Economic and Social Research senior research fellow Dr Ferdi Botha.
“There is surely a risk that a greater proportion of Australians will become more financially stressed if, in addition to already high inflation rates, they overspend on non-essential goods and services over the Christmas period,” Dr Botha said.
Inflation is significantly cutting into Australians’ pay packets, rising 7.3 per cent in the past 12 months and 1.8 per cent in the September quarter alone.
More than three-quarters of September’s rise was from a jump in the cost of goods, with food alone rising 3.2 per cent in the past quarter and 9.0 per cent in the past year.
Fruit and vegetable prices have risen by 16.2 per cent in the past year, with dairy products not far behind at 12.1 per cent, with costs expected to grow as the impact of flooding bites.
There are currently more than 13,000 Australians using HelpPay to make ends meet, a number which has shot up in a “straight line of growth” according to Mr Wilde.
“The number of Australians turning to friends and family for financial assistance does reflect an underlying rising desperation among people to continue making ends meet,” Dr Botha said.
“For those individuals, there are likely few alternative options left, and so they may feel compelled to ask family or friends for help.”
There are already concerns about Christmas spending, according to Mr Wilde.
“We’re seeing people thinking about Christmas and what it’s going to be like,” he said.
“People are not kicking the can down the road, they’re trying to be responsible.
“They‘re trying to do the right thing, it’s just the cost of living is kicking a lot of people while they’re down and it really sucks.”
The Christmas period can present a serious financial danger if families aren’t careful with their spending, according to RateCity research director Sally Tindall.
“The temptation might be for some families to pull out the credit card to plug the hole, but that can make things a lot worse in the medium to longer term,” Ms Tindall said.
A huge portion of the Australians who use HelpPay to make ends meet are women supporting their families, according to Mr Wilde, with some turning to strangers just to pay the bills.
“What we‘ve seen since starting this is an incredible outpouring of relief to people who need help at the moment, particularly single mothers who are working up to three jobs just to get through because the cost of living is rising so rapidly,” he said.
A Facebook Group has been set up for those who need to reach out to strangers for bill relief, with multiple posts every day from single mums trying to make ends meet.
The soaring cost of living has caused despair in many Australian households, according to Dr Botha.
“The expected increases in rates of financial stress – brought about by current and anticipated increases in the cost of living – ought to be a major cause for concern, especially in terms of Australians’ psychological health,” he said.
“We know that financial stress is a strong predictor of poorer mental health, and so a rising trend in financial stress is likely to be associated with a rising proportion of Australians at greater risk of developing serious mental illness.”
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