The cost of politeness: Aussies out of pocket by $1,350 due to 'awkward tax'

By Newsdesk

December 06 2023
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It's the time of year when Australians dive into their pockets for festive events and gatherings, yet a recent study by PayPal suggests that many are too polite, or perhaps too embarrassed, to ask for compensation for their generosity.

The cost of politeness: Aussies out of pocket by $1,350 due to 'awkward tax'

In fact, Australians estimate they're on average $1,350 down because their mates failed to settle their debts.

The research unpacks a social dilemma faced by half of the country—50% of individuals feel uncomfortable nudging to reclaim cash owed to them, with 44% opting not to pursue debts because it's too embarrassing, and nearly half (46%) knowingly paying for things such as meals or group activities, fully aware that they won't see that money back.

This significant shortfall in personal finances isn't without consequences, as 22% choose to bypass activities with certain friends to avoid the awkwardness of financial transactions, and 16% specifically avoid footing the bill to circumvent the scenario entirely.

When it comes to identifying the culprits, friends top the list of payback offenders, with co-workers and adult children following suit. The most risky scenarios for out-of-pocket experiences include group meals, takeaway food runs, and purchasing group gifts.

However, the solution for some lies within technology—24% of Australians are more at ease using digital methods to request for payments, and this convenience is even more appreciated by the younger crowd, with 35% of under 35s prefer this approach. Additionally, about 29% like to use an app to split bills, while this figure soars to 45% among the younger participants.

Despite these findings, the research highlights the conscientiousness of many Australians. A reassuring 63% always ensure they repay their dues without the need for a reminder, and 38% would feel humiliated if otherwise prodded. Particularly, transparency in financial exchanges is a priority for Boomers, who significantly outpace the under 25s in their preference to be owed rather than owing.

Alison O'Brien, Consumer Insights Expert at PayPal Australia, provides some perspective, stating, “Everyone is watching their spending more closely with the current cost-of-living pressures, especially approaching what can be an expensive time of year, so it’s really important to make sure money doesn’t create tension in relationships." According to her, "While we should all strive to be more fearless to ensure fairness, it’s great to see that Australians are finding value in features like PayPal’s payment requests and bill splitting to take some of the sting out of sensitive situations.”

The insights from this study reflect the apparent value of communication and technology in easing the social friction associated with financial matters among friends.

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