Jayson Forrest is the managing editor of Money & Life Magazine.
A look at some of the key findings from the FPA’s Financial Planning Week research - Gifts that Give.
As part of last month’s Financial Planning Week (19-25 August), the FPA commissioned national research to uncover and better understand the gift-giving habits and expenses of Australians.
The Gifts that Give research explores the types of gifts we give, how much we spend on gifts, the internal drivers of gift-giving and personality gift-giver profiles to help people identify their own gift-giving preferences.
In releasing the research, FPA CEO Dante De Gori CFP® said he was delighted to see that 85 per cent of Australians find more pleasure in giving gifts to others than in receiving gifts, but was concerned that the research showed that most of our generosity was unplanned.
“Significantly, $19.8 billion spent on gifts each year in Australia is not accounted for in household budgets by three in four Australians,” he said. “That’s an obvious opportunity to increase our nation’s financial literacy and awareness of the benefits of budgeting, planning and giving in a way that brings joy without debt or regret.”
However, De Gori was encouraged by one outstanding fact from the research: four in five young Australians would like to receive the gift of time with a financial planner, specifically 81 per cent of Gen Z (aged 18-24) and 76 per cent of Gen Y (aged 25-39).
“That fact, combined with the strong trend towards giving cash or gift cards, inspired the FPA to create a practical gift in the form of a gift voucher, where people can pledge to contribute to pay for the services of a financial planner to an agreed value.”
Gifts for the future: a financial plan
The research uncovered that three in five Australians would like to receive the gift of time with a financial planner, providing them with the peace of mind knowing their finances were in order, and providing a path forward to achieving their financial and life goals.
This figure was higher with younger Australians, who were increasingly aware of the challenges and complexity of managing their finances well. Four in five younger Australians (aged 18-39) said they would like to receive the gift of time with a planner.
These generations were already exhibiting responsible financial behaviour, with two-thirds of them (64 per cent of Gen Z and 67 per cent of Gen Y) saying they have a budget to manage their finances, compared to 53 per cent of Gen X (aged 40-54) and 46 per cent of Baby Boomers (aged 55-73).
The research also discovered that weddings were the biggest gift-giving occasion by Australians, with people spending an average of $137 on a wedding gift. The top gift types given for weddings were cash and gift cards (44 per cent), with home and garden gifts (26 per cent) coming in second.
Not surprisingly, birthdays also featured in the spending habits of Australians, with an average of $50 being spent on a gift for a child and $66 for a teenager.
Families with young children purchase the greatest number of birthday gifts. Two in five (44 per cent) buy one or more gifts each month. Not only do they buy the greatest number of gifts, they also spend the greatest amount – $123 per month, compared to $100 overall.
And when it comes to the festive season, consumers spend an average of $93 on a Christmas gift, while those with young families spend more, averaging $117 on a Christmas gift.
The top three Christmas gift preferences were: cash or gift cards (31 per cent); food and alcohol (14 per cent); and technology and gadgets (12 per cent). Interestingly, Gen Z were the only generation likely to give fashion and jewellery as Christmas gifts and were least likely to give cash or gift cards.
Another interesting finding uncovered by the research was the popularity of giving cash or gift cards for special occasions, other than children’s birthdays, when toys were the favoured option.
Of all the generations, Baby Boomers indicated the highest preference giving cash (including gift vouchers and gift cards), with 53 per cent preferring to give cash for weddings, 41 per cent for Christmas gifts, 38 per cent for adult birthdays, 45 per cent for a teen birthday, and 21 per cent even prefer to give cash for a child’s birthday.
However, the research confirmed that not only do Australians prefer to give cash for these significant occasions, they also prefer the convenience and usefulness of receiving cash or gift cards.
Even parents reported their children were also strongly cash or gift card focused, with cash coming in as their second preference for a birthday gift.
The gift of time
As the pace of life speeds up, it’s not surprising that more Australians feel time-poor. This was reflected in the research, which showed that intangible gifts are often the most practical gifts to share and receive by Australians.
Spending time with family and friends was one of the most sought-after birthday gifts by responders. Given the choice, 61 per cent said they prefer others to celebrate their birthday with them, by spending quality time together.
In fact, the research revealed that Australians prefer an experience together (39 per cent), before a tangible gift or cash gift (30 per cent).
Intangible gifts were particularly important for Gen Z, which was the only generation where half (53 per cent) said that receiving an intangible gift, such as time, an experience, or learning a new skill, had a more significant impact on shaping their life than a physical, tangible gift. In contrast, this was just 27 per cent for Baby Boomers.
Another trend identified in the research was group giving, with nearly three-quarters (73 per cent) of Australians participating in group gift-giving.
Group giving is particularly popular among the younger generations, with four in five Gen Zs and Gen Ys participating in group giving, compared to only three in five Baby Boomers. Women were more likely to participate in group gift-giving than men (77 per cent compared to 69 per cent).
The Gifts that Give research is based on a national quantitative survey of 1,000 Australian adults. The research was conducted between 2-10 July 2019. To read the report in full, download a copy here.
4 gift-giving personalities
There are four distinct gift-giver personalities in Australia. They are:
Spend $103 per month on gifts
Least likely to bulk buy gifts (29%)
Mostly female (57%)
Most likely to value the gift of seeing a financial planner (64%)
Spend $104 per month on gifts
Most likely to budget for gifts (40%)
Highly value the gift of seeing a financial planner (60%)
Most likely to be older (66% Gen X or Baby Boomer)
Spend the most on gifts at $112 per month
Mostly female (61%)
Least likely to budget for gifts (24%)
Highly likely to value the gift of seeing a financial planner (61%)
Spend the least on gifts at $85 per month
Least likely to value the gift of seeing a financial planner (53%)
Highly likely to be older (61% Gen X or Baby Boomer)
Prefer to give cash or an easy gift, such as wine or chocolate