The end of the year holiday season is almost here. Many people will be spending money as they purchase gifts and travel to visit friends and family. British consumers spend over £390 each just for Christmas alone–a total of over £14 billion. An estimated 42% of consumers make purchases on Black Friday and another 25% on Cyber Monday. Until the end of the year retailers see massive sales increases related to Christmas, Hanukkah, Boxing Day, and New Year’s. Many consumers have developed a tradition of spending more than they should on credit cards. We will look at the ways that consumers are overspending and potential strategies to reduce these excesses.
Excessive Year-Long Overall Spending
The Office of National Statistics compared consumer spending from 2017 to 2016. There was an overall increase in money spent per household on all good and services. Some of the leading categories that increased were food, drink, clothing and recreation. The Association of British Travel Agents also reported that over 30% of people increased the amount spent on traveling.
Paying for Christmas Gifts
|Ways of Paying for Gifts|
|Savings (For All)||57.3%|
|Credit Cards (Partially)||38.5%|
|Credit Cards (For All)||14.3%|
|Short-Term Payday Loan||12.6%|
|Other Personal Loan||9.1%|
|Borrowing From Friends/Family||8.9%|
Accumulating Too Much Debt
The truth is many consumers are not responsibly managing their finances long before the holidays arrive. The Centre for Responsible Credit says over three-million households in the U.K. pay over 25% of their income to creditors. Roughly 50% of these consumers are in the lowest 20% income bracket. Younger people are increasingly coping with different forms of debt. Over 50% of those between age 18 and 24 have student loan debt. Over 40% of those between the age of 25 and 34 have credit card debt. The Financial Times reports that approximately 70% of those under the age of 34 borrow regularly to pay regular bills and household expenses.
Failing to Plan Ahead for Holiday Season Spending
Many consumers fail to consider how they will pay for holiday shopping despite overspending every year. One key is to create a savings plan and contribute to it each month. It is important to begin to save money in January or February. This is often challenging when your budget is tight. Put together a gift list with a gift idea for all those you are buying for when planning a holiday budget.
Spending on Extras (Add-On Items)
Often it is easy to overlook the many extra expenses that you will spend money on during the holiday season. For example, gift wrapping materials and greeting cards will add up quickly. When giving electronic gifts we often overlook the added cost of batteries. If traveling by car to visit relatives it is important to factor in the extra fuel costs. Those who mail holiday cards often forget that postage can really add up.
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Fast Online Loan for the Holidays
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