Brits overspending on Christmas budgets

Tis’ The Season to be Overspending

Posted on 20th November 2018

New research finds 1 in 5 Brits overspending their Christmas budget, leading to long term debt throughout the year.

We know that Christmas is a time for giving and receiving.

In doing so we make our loved ones happy and thus spread the Christmas cheer.

Yet sadly, the giving part is causing untold strain on people’s finances.

New research by Peachy, who surveyed over 2,000 UK consumers, demonstrates that despite individuals and families looking forward to the Christmas festivities, 36% of them see that most of their money is going spending gifts for others.

Furthermore, this Christmas spending research highlighted some worrying trends amongst the recipients surveyed.

  • 21% felt they spend too much on Christmas food
  • 30% found it hard to budget for Christmas
  • Alarmingly, a quarter felt that Christmas moved them into financial difficulty

36% of Brits feel guilty when other people spend more than they do on gifts – UK Market Research, October 2018

Last year, Brits spent an average of £1,149 on Christmas, yet 64% of them actually went over their Christmas budget.

With families recklessly overspending on summer holidays and attempting to match the lifestyles of their friends and neighbours, Christmas only adds to the strain of already stretched finances.

After the Christmas overspend, households have had to make cutbacks. 42% of households stop going out in January, with 38% stop buying clothes. And yet, all this at a time when retailers are asking us to spend more in the January sales.

Still, in January 2018 retail sales fell by 1.5% demonstrating that Christmas finances are beginning to pinch household budgets.

Despite these spending cutbacks in January; the biggest concern for 42% of Brits is that they struggled to pay their January household bills because of Christmas overspending. 22% of them even had to dip into their savings just to ensure the January expenses were paid on time.

But what about those who don’t have savings?

Peachy’s research highlighted that Christmas overspending not only impacts January bills but also affects the long term, with:

  • 15% struggled to pay their February bills
  • 7% struggled to pay their March bills
  • 5% struggled to pay their April bills

What this means is that it’s not until the month of May – 5 months after Christmas – that households get back on track with their finances. Of course, this is just in time for the annual British summer holiday where once again, finances take a hammering.

To ensure that the bills are met, Brits are taking out loans and credit card debt that on average equates to £398.19 (not including interest) just for Christmas. A total of £8.5 billion for the nation has been loaded onto credit cards and loans at Christmas and 1 in 10 people are still paying off the previous years debt come December.

It’s tempting to apply for more credit to cover not only the cost of Christmas but the household expenses in the following months afterwards.

Avoid getting into Christmas debt with these 5 easy tips for Christmas this year:

  1. Set a budget and stick to it: think of how many people you must buy for and then look for gifts that fit the budget. Never find gifts for others and then see if they fit into your overall Christmas budget.
  2. Shop ahead and online: don’t leave everything till the last minute. Check out supermarket websites and Amazon and buy some items each month leading up to Christmas. You won’t have such a big hit on your monthly December finances and have the added bonus of getting your gifts delivered to your home, thus avoiding the busy Christmas shoppers!
  3. Suggest a family spend limit: Christmas is really about the family, so the whole family should agree in advance on how much to spend per adult/child and stick to it, so there are no accusations of over or underspending on gifts.
  4. Travelling to meet the family?: If you are like many around the UK, Christmas means travelling to meet family members not necessarily in their hometown. Should this be you then book your rail fares way in advance – advance tickets are generally cheaper and can save you and your family tens of pounds!
  5. Ditch the turkey! OK, this sounds controversial, yet if you have a small gathering why not buy a cheaper meat instead like chicken or pork? Turkeys have a price markup at Christmas and are generally bigger birds anyway, so why pay for expensive food your family will unlikely eat.

Rather than be tempted to apply for more credit cards or dip into your overdrafts – consider reducing the expectations of those who will receive at Christmas. Subsequent months of debt can lead to a serious strain on families and personal relationships.

Author: Katre Kaarenperk-vanatoa

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