With the onset of summer comes the beginning of UK travel plans.
But, did you know that 40% of UK holidaymakers are not budgeting carefully and thus paying the price later?
Alarmingly, 97% of holidaymakers don’t regret reckless spending on their summer holidays, leaving them with unmanageable debt once the summer is over.
In April, we surveyed more than 2,000 consumers and the results provide a clear example of how households forsake their careful budgeting for that summer holiday each year.
This new survey demonstrates:
- 25% of respondents state they do not care about spending as long as they have a nice holiday
- 29% use credit cards or short term loans with the intention of paying off the holiday once they return
- 25% do not keep track of their holiday spending when abroad
With over a quarter of respondents showing little appreciation for taking on debt for summer holiday purposes, this leaves them with potential debt management issues once the sun, sea, and sand are far behind them.
In the same survey, respondents state that:
- 62% of them are embarrassed to borrow money from friends and family
- 52% worry about ruining relationships with friends and family because of asking for money
- 26% of them fearing they will not repay the money in time
- 17% are concerned that they would feel obligated at some point in the future of being asked to lend money to family and friends, impacting their finances
Katre Kaarenperk-Vanatoa, credit expert and CMO at Peachy says:
“Saving, but not spending your money can be boring, and when it impacts your lifestyle, you’ll be less likely to keep it up.”
According to an FCA report, less than 5% of household incomes are going to any form of saving, yet Brits are still able to pile on £20 million a day on credit cards.
Simply put, Brits are terrible at saving.
Furthermore, 58% of them do not pay off their balances each month.
So, even though 29% of survey respondents state they will use a credit card and loan for their holiday with the intention of paying it off once they return, 58% of them will actually not achieve this.
And it’s not only care-free millennials who are overspending – the survey results indicate that:
- 27% of over 55-year olds do not keep track of what they spend on holiday
- 30% of 45-54 year olds will use a credit card or take out a payday loan to pay for the holiday (compared with only 25% of 18-24 year olds)
Summer holidays then are more essential for older-aged Brits and not only millennials.
But, what does this mean for those unable to pay back their summer holiday debt?
If we analyse only overdraft debt, the average Briton has an overdraft of £1,722 with 79% of households using overdrafts to cover their household expenses. With some banks charging up to 52% if you borrow only £500 for seven days, holding debt caused by a summer holiday has suddenly become crippling for many.
Combined with the uncertain economic situation with Brexit and how that impacts personal finances, UK households are finding even the basic foods like vegetables, meat and coffee/tea are now more expensive than ever, placing further strain on households monthly budgets.
With the British Summer just around the corner, many of us are looking forward to our holidays, whether in the UK or abroad. But one detail often overlooked is how much summer holiday plans will cost – so avoid being one of the 40% that doesn’t budget carefully and start planning today!
Not sure how to save?
We’ve rounded up a list of our top savings hacks that could help you and your household save £1,870 each year, which is more than enough to spend on your holiday this summer!