UK households may be feeling the pinch of unprecedented living cost increases, but it seems even record inflation cannot quell the country’s collective craving for good times. According to the latest data published by Forbes Advisor, around 20% of Brits are now using loans (and other financial products) to buy gifts for important events and celebrations.
According to Forbes, 11% of UK residents have used personal loans to cover the costs of attending and buying gifts for events like birthdays, weddings, and christenings. Similarly, 11% said they had resorted to potentially expensive payday loans to ensure they were able to attend parties and events, while a full 26% said that they put the costs of attending events on their credit cards.
Elsewhere, 12% said that they had borrowed money from family or friends to cover the attendance and gift costs of these ‘life events’ and other important happenings.
Cost of living increases hit hard
With UK inflation at a 30-year high of 5.5%, every UK household is feeling the pinch of unprecedented cost of living increases. As a result, 26% of those surveyed by Forbes said that they have had to spend less on parties and events (attendance and giving gifts) due to rising fuel, energy, and food costs.
Around 13% said they have been rendered unable to buy gifts for such events or attend them in the first place due to ongoing living cost hikes.
Even so, Brits continue to spend surprisingly significant amounts of money on attending important events. According to the Forbes survey, this is how much the average person spends on attending and buying gifts for major life events:
- Family wedding: £235
- Hen/stag party: £199
- Friend’s wedding: £199
- Graduation: £189
- Baby shower: £165
- Engagement party: £159
- Anniversary party: £156
- Naming ceremony: £154
- Adult birthday party: £142
- House-warming: £138
The financial crisis is putting a major strain on relationships, with more than 40% of those surveyed admitting they had fallen out with friends and family members over event attendance and gift costs. In addition, more than 50% said that if it were socially acceptable to do so, they would prefer not to give gifts when attending important events like those above.
“The end of COVID-related restrictions on international travel and guest numbers at events such as weddings, self-isolation, and mask-wearing is a massive breath of fresh air as we head towards a brighter spring and summer of 2022,” commented Laura Howard, personal finance expert at Forbes Advisor.
“Yet, as we come out of one crisis, the weight bears down heavier on another—the soaring cost of living. Of course, this is in no way comparable to the suffering that millions of Ukrainians fleeing their homes as a result of the war are facing right now. But, for those of us on UK soil, it’s the kind of worry that can keep us awake at night.
“Inflation as measured by the Consumer Prices Index (CPI) measured 5.5% in January—a 30-year high—while the figure for February is almost certain to be higher still. And even that figure will not reflect the next hike in energy costs set to whack household budgets in April.
“We have little choice but to power our homes, fill up our cars with fuel, and do the weekly food shop—all costs that have soared since the pandemic began. But for more and more households, this is simply where the money runs out and ‘extras’ such as life celebrations become unaffordable.”
“It’s little surprise then that an increasing number of us are resorting to borrowing to fund these celebrations—in some cases even using payday loans.”
“Cutting back on expenses is no easy feat, especially now when cheap energy deals are no longer available. But it’s worth seeing if there are some unnecessary expenses to tackle.”
Is it time to switch?
Ms Howard went on to highlight the potential savings many households could make by switching to new lenders and financial service providers.
“Are you paying interest on credit card debt, for example, when you could transfer the outstanding amount to a 0% balance transfer deal? Are you free to switch your better mortgage deal or reserve your next one (which you can do between three and six months in advance) before the next likely rise in interest rates?” she said.
“It could simply be that you are paying for services or features that you don’t use, such as on your broadband and TV deal, for example.”
“Any cash that’s being unnecessarily spent is always likely to find a welcome home, such as to fund life events and celebrations this year. But if it’s simply not available, the key is not to buckle under pressure and spend what you don’t have. Being creative and thoughtful with gift-giving can be a remarkably effective substitute that’s also often likely to be remembered for longer.”