Xero reports pay day splurging leading to ‘payphoria’ and overspending

- October 21, 2019 3 MIN READ
  • One in three workers have less than $100 in their bank account in the lead-up to payday
  • One in five Aussies look towards Afterpay, payday loans, credit cards or overdrafts to get them by ahead of payday
  • Aussies count down the days until payday, and when it comes around, one in three spend more money on payday than they ordinarily would

Recent research by Xero has revealed many Australians are feeling the pinch of the current economic climate, with a third reporting they have less than $100 in the bank when payday rolls around.

Many Australian’s are looking to payday loans, credit cards and buy now pay later schemes to stem the shortfall. While one in three report counting down the days until payday and overspending when money finally lands in their account.

The Xero Payphoria Study found a significant portion (63 per cent) of Aussies are having financial difficulties before payday, relying on short-term fixes to support them ahead of payday. To get by, one in five Australians look towards Afterpay, payday loans, credit cards or overdrafts, while 12 per cent even ask their friends and family to dip into their pockets to help them get through.

The study also linked the frequency of how often Aussies are paid to their ability to save. It found a higher proportion of workers who were paid monthly were more likely to save, while those who were paid weekly were more likely to be spenders. It also found that those in the city are more likely to be savers than those in rural areas.

“Australians are tightening the purse strings ahead of payday, cutting back on life’s simple pleasures like the morning coffee or eating out. It’s not surprising that when payday does come around, Aussies are experiencing rushes of ‘payphoria’ and are wanting to reward their hard work by spending up,” Angus Capel, Xero Small Business Advocate, said.

Woohoo it’s payday!

Half of Australian workers count down the days to their next pay, and a significant number (58 per cent) mark the occasion as a celebration. For two out of five, payphoria brings about feelings of happiness, followed by a sense of relief.

As part of ‘payphoria’, one in three Australians were spending more money on payday than they ordinarily would, with Australians believing they should be able to splash their hard-earned cash.

For just under one in three Australian workers payday means enjoying their hard-earned money by treating themselves or others, having a night out with friends or family, making an extravagant purchase, booking a trip or event, or buying a new outfit – with 80 per cent of workers recognising they work hard and deserve to enjoy their money now.

Payday Trends

Those paid weekly are largely happy with the frequency of their pay, one in three of those paid fortnightly and one in two of those paid monthly would prefer to be paid more frequently; almost half of the Australian workforce seek weekly pay, followed closely a preference for a fortnightly pay cycle.

For a quarter of working Australians, the timing of payday impacts people’s lifestyles, primarily making it hard to manage money and meet day to day needs (70 per cent), but also encouraging extravagant spending (45 per cent).

“Mapping out Australia’s payday trends has shown that people have a huge emotional and psychological response to their earnings. In any discussion of payday, the starting point has to be for employees to be paid on time and accurately, and with the correct benefits. This can be a complex thing  to get right, but thankfully there is a range of tools and technologies that can support this.   There are also initiatives like the ATO’s Single Touch Payroll (STP) that ensure all small businesses in Australia are reporting their payroll digitally, improving efficiencies and reducing errors. Xero has been working with small businesses across Australia to help them adopt new payroll technologies, ensuring both employers and employees can be supported to do their best work,” continued Capel.

“Findings such as people tend to save more if they are in longer cycles, or that workers in the city and the country have differences in the management of wages casts a spotlight on the economic impact of payday for all Australians, and the economy more broadly. While there are many differences between how people spend their wages, we wanted to define that feeling that we all get on payday and “payphoria” says it all,” Capel added.


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