Emergency super spent on pokies, beer, and Uber Eats

Whilst some Australians in desperate need, have used early super withdrawal to pay bills and debts or to invest in their future, others have spent thousands on gambling, alcohol and takeaway food.

Early super withdrawers spent an average of $3000 above their normal spend in the first 2 weeks of receiving the money. Data from Alpha Beta and Illion shows this money was spent on beer, wine, pokies, and takeaway food rather than mortgages, bills, car debts, and clothes for their children. At the end of the day, people can spend their money on whatever they want, after all, it is their money.

Is early super access a formidable strategy then?

Whilst 14% of the increase in spending was in the form of debt repayment; gambling, alcohol, takeaway, apps, games, and movies made up a large portion of the extra spend.

One of the arguments for early super access was to help tenants pay their rent. Only 4% of the extra spend was used to pay rent. 40% of those who chose to withdraw extra super averaging around $8000, had no actual drop in income.

Whilst extra spending can help bolster our economy, it’s a pin drop in the ocean. One that will lead to poorer outcomes for these individuals come retirement. For a 18 year old, $10,000 of super withdrawn now can result in up to $100,000 less superannuation at retirement age.

What should early super withdrawers spend their extra money on?

• Debt repayment,
• Bills,
• Essential goods rather than discretionary and luxury items,
• Education and upskilling,
• Investment in their future (e.g. The purchase of an industrial dough mixer to start an artisan sourdough bakery).

As you can see from Illion’s chart below, Essential spending shot up mid-March when the crisis began, whilst discretionary spending plummeted. By the end of March, all spending had dropped reaching a low at the end of April. With the easing of restrictions, consumer spending is on the rebound and almost back to pre-pandemic levels.

What we spend our money on has changed. From the chart below it’s clear that whilst spending on gyms, pubs and public transport has dropped significantly, we are spending up big on alcohol, tobacco, online gambling, furniture, and takeaway.