If you didn’t heed the message of our last blog, there’s a chance you spent a fair bit to impress your special someone on Tuesday. A couple hundred bucks on dinner there, a couple hundred on flowers there. If you did, you weren’t alone. While the stats aren’t exactly covered by the ABS, just a couple of years ago analysts at IBISWorld put Valentine’s Day spending at nearly $800 million. Perhaps unsurprisingly, most of the money is spent on flowers. But around $441 million was spent on travel, and $68 million on clothes and ‘intimate apparel’ (ooh la la!) Just last year, restaurant booking platform OpenTable released some stats which suggested that most Aussies planned to go out for a meal on Valentine’s Day, and the average planned spend was $107 each.
To be totally fair, there’s a chance you budgeted for this occasion a few months ahead. If you budgeted, saved and prioritised Valentine’s Day, good for you. But the vast majority of Valentine’s splurges are last-minute buys that go on credit cards or personal loans. In fact, one survey by Canstar revealed that 48% of people leave gift-buying ‘til the last minute, and 12% even resort to quick buys at the servo.
This isn’t ideal for a few reasons. Firstly, that hot date at a fancy restaurant could end up costing you twice the price once you’ve paid it off, thanks to the interest charges. The average rate is around 16-17%, which is a fair mark-up on already-inflated V-Day prices. If you don’t pay the phone thing off by the end of next month, you’ll be slugged compound interest on top of that. So if you ignore the expense for a couple of months, that $107 dinner could cost you closer to $150.
Then there’s the fact that every dollar you spend on a one-day (or night) experience is a dollar you’re not saving (or investing) for something more important. The money you save, in both initial purchase price and card/loan interest, could go towards a real financial goal. For example, Finder reckons that people in long-term relationships spend about $145 on each other. If you chucked that in a high-interest savings account at around 3% p.a., and do the same thing for a couple more years, you’d have enough for a decent romantic minibreak. Keep up the habit for a few more years still, and you might have enough for that engagement ring!
If you paid for your Valentine’s gift or date on credit, there are a few lessons you can learn for next year:
Choose a cheap or free gift/date idea – they can be just as meaningful, if not more
If you must do something that costs money, set a budget and plan ahead
Pay off any unexpected card purchases ASAP
Put the money towards saving for a bigger, better goal instead
Reminder: Money101 has a great range of affordable and cost-effective online financial education units on debt and savings. Check out our off-the-shelf solutions today.
-  https://www.ibisworld.com.au/media/2014/02/05/lovers-pick-premium-valentines-day/
-  http://www.hospitalitymagazine.com.au/food/news/valentine-s-day-dining-led-by-gen-y
-  Quoted in http://www.news.com.au/news/spending-on-love-is-being-shunned-this-valentines-day/news-story/1227745291856
-  https://www.canstar.com.au/credit-cards/aussies-pay-24-billion-average-interest-over-four-years/
-  https://www.finder.com.au/press-release-valentines-day-2016
-  https://www.moneysmart.gov.au/tools-and-resources/calculators-and-apps/compound-interest-calculator