Two thirds of Brits to cut back at Christmas as average living costs soar to £1,541 a month

4 December 2018

  • Nationwide Spending Report shows £8 in every £10 of average salary goes on essential spend
  • Rise in essential costs comes as discretionary spend dips for the second consecutive period
  • Poll shows Brits had average £426 debt last Christmas, taking 2.5 months on average to pay off
  • But children set to have average of £153 spent on them as parents refuse to cut back on kids

Two in three (67%) Brits1 are set to reduce overall spending this Christmas as the cost of living begins to eat into their ability to spend, a Nationwide Building Society poll2 reveals.

Nationwide conducted the research as part of its quarterly Spending Report to better understand the impact of Christmas on household finances, at a time finances are under increasing pressure due to rising living costs.

The Spending Report – an analysis of nearly 710 million Nationwide customer payment transactions – highlights that on average Brits spent £1,541 on living costs in the third quarter of 2018, equating to some 81 per cent of the average £28,400 salary. It also shows that essential spending rose by 8.3 per cent year -on-year, while year-on-year discretionary spending has dipped for the second consecutive period – fuelling the view that pressure is mounting on British consumers.

The seasonal poll of over 2,000 UK adults shows that some 67 per cent of people are aiming to rein in yuletide spending this year, with more than one in three (34%) cutting back due to reduced disposable income or tight finances (34%), while around one in six (15%) are concerned about their financial situation next year.

According to the poll, the average person was saddled with £426 of Christmas debt3 last year and took an average of two-and-a-half months to pay it off. However, for a third (32%) it took up to July – seven months – to pay off the costs. And with the Spending Report revealing the average monthly unsecured debt repayments as being £455, the added cost of Christmas is likely to put more pressure on household budgets.

More than half (56%) of those that racked up debt last year plan to cut back their spending this year as a result, while only a quarter (26%) said it wouldn’t impact their Christmas spending4.

Despite efforts to cut back, the cost of Christmas is expected to come to £741 when tallied up – including spending on gifts for family members5 (£347) and other festive spending (£394) such as parties, drinking out, eating out, decorations, cards, wrapping and clothes shopping6. However, when it comes to gender, nearly three quarters (73%) of women aim to curb spending compared to around half (56%) of men.

The poll shows that despite 85 per cent of Brits setting a budget for Christmas, they underestimate the cost of it by around £300, with the average Brit expecting to spend £461 this year – far short of the overall figure of £741. This is supported by the fact that seven in ten (71%) admit to ignoring their budget, with close to three quarters (73%) admitting to getting carried away with spending compared to other times of the year.

Family Christmas tree

Brits expect to save money at Christmas by spending less, or nothing at all in some cases, on family and friends. Around half (48%) of those polled plan to spend nothing on their boyfriend or girlfriend, while 28 per cent plan to spend nothing on their husband or wife. Some 16 per cent are refusing to buy for any adult in the family, while one in ten (10%) are doing a family Secret Santa to cut the costs. Just six per cent are willing to cut out giving presents all together.

Children remain unaffected by this year’s planned festive cutbacks, with respondents planning to spend £153 on their kids, which makes up almost half of the present budget for family members5, while almost one in five (18%) parents are planning to spend more than £300.

Family member Planning to spend 2018 per family member
Children £153
Husband/Wife £83
Other Family Members (Aunts/Uncles/Cousins) £64
Boyfriend/Girlfriend £51
Siblings £47
Friends £38
Colleagues £28
Pets £27

Christmas on credit:

Borrowing may be the only option for many to cover the festive period, with respondents saving £170 on average beforehand. However, more than a third (37%) say they don’t save any money and nearly a quarter (22%) say they bury their head in the sand and deal with the cost when Christmas comes7.

Borrowing comes in many forms, with one in five (21%) relying on their parents to cook the Christmas dinner, top up their finances (10%), provide a loan (8%) or buy the more expensive presents for the children.

Regional breakdown:

The research highlights significant regional differences when it comes to the levels of debt people found themselves in last Christmas. Those in the North West, East Midlands and the South West clocked up the most debt, while those in the South East of England, West Midlands and Greater London had the lowest levels of debt.

Areas with highest average Christmas spending debt Areas with lowest average Christmas spending debt
North West £520 South East £375
East Midlands £467 West Midlands £414
South West £461 Greater London £424

The research also shows that those in Northern Ireland, Greater London and the South West are more likely to be budgeting this year.

Top three regions cutting back on Christmas Top three regions not planning to cut back on Christmas
Northern Ireland 78% Scotland 39%
Greater London 72% West Midlands 36%
South West 70% Wales 36%

Guy Simmonds, Nationwide’s Head of Customer Management, Current Accounts, said: “Our latest Spending Report shows that household budgets are increasingly strained as bills continue to rise. For many, this means a tightening of the purse strings on Christmas spending or reduced spend on discretionary outgoings as people seek to take control of their finances. However, it is comforting to see that despite pressures children remain front and centre of spending plans at Christmas.

“To help avoid overspending, we recommend making a festive budget and sticking to it as much as possible. It’s always worth saving as much as possible ahead to lessen the impact, as well as making the most of deals, vouchers and discounts.”

Notes to Editor:

1 Based on British people who celebrated Christmas
2 Research by CensusWide: total sample size was 2,039 UK adults. The survey ran from the 19.10.2018 to 23.10.2018
3 Based on respondents who built up debt over Christmas
4 Research by CensusWide: total sample size was 1,442 UK adults partaking in Christmas celebrations. The survey ran from the 19.11.2018 to 20.11.18
5 Based on someone buying gifts for husband/wife, children, siblings and other family members
6 Based on people who spend money on Christmas dinner, alcohol, eating out, drinking out, parties, decorations, clothes, sale shopping and other Christmas expenses such as cards and wrapping paper
7 Based on respondents who ignore the debt they build up

About Nationwide

Nationwide is the world's largest building society as well as one of the largest savings providers and a top-three provider of mortgages in the UK. It is also a major provider of current accounts, credit cards, ISAs and personal loans. Nationwide has around 15 million customers.

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