Apparently we think holidays, nights out and cinema trips are spending essentials, but is this sending us into financial ruin?
The economy is in tatters, savers are getting dismal returns on their cash and inflation is still running above the Bank of England's target rate of 2%. Despite this, we're spending even more now on luxuries.
In fact, the average spend per household is a whopping £6,194 on so-called ‘lifestyle essentials’, which include nights out, holidays, haircuts and takeaways, according to new research from LV=.
Although studies like this do generally need to be taken with a large pinch of salt, the interesting news to me is that spending on these ‘essentials’ has increased by £9 billion since last year to a total of £158 billion.
That’s quite a lot considering in the same time one in five people has experienced a pay freeze.
Our top lifestyle essentials
Top of the list is unsurprisingly holidays with households spending an average of £3,250 on their yearly summer break and also on weekend trips throughout the year. Just under half (44%) of those asked classify it as an essential, while 27% put meals out in second place in their top ten lifestyle essentials.
Also featuring in the results were gym memberships, TV subscriptions and trips to the cinema.
Top 10 spending essentials
|
Rank |
Lifestyle essentials |
Total amount spent in the year to August 2012 (billions) |
Total amount spent in the year to August 2011 (billions) |
|
1 |
Holidays and weekend breaks |
£83.3 billion |
£81.5 billion |
|
2 |
Meals out in restaurants |
£20.2 billion |
£19.4 billion |
|
3 |
TV Subscriptions |
£8.1 billion |
£7.8 billion |
|
4 |
Haircuts |
£4.5 billion |
£4.4 billion |
|
5 |
Nights out in pubs and bars |
£12.1 billion |
£11.6 billion |
|
6 |
Takeaways and delivery meals |
£12.5 billion |
£12.1 billion |
|
7 |
Culture and arts |
£2.8 billion |
£2.7 billion |
|
8 |
Gym and sport memberships |
£6.5 billion |
£6.3 billion |
|
9 |
Trips to the cinema |
£833 million |
£804 million |
|
10 |
Premium foods |
£7.3 billion |
£7 billion |
|
Total |
|
£158 billion |
£149 billion |
What would you class as essential?
Now while I do love a good meal out, and spending a week or two in the sun is a lovely thought, I wouldn’t call either of these essential to my life. So I find the study a little hard to accept.
This is the same for cinema trips, takeaways, haircuts and pretty much everything on this list. I don’t see them as essentials, at all, but rather nice luxuries. If money is tight there are other things I’d spend cash on first.
Rent, utility bills and food all come under the essential category for me along with travel. This is the kind of thing I would like to see included in the list and I’m interested to know how people have struggled, or not so, in paying day-to-day essentials.
According to LV= a third of us are saving money by bringing in our own packed lunches while 11% take their own tea or coffee into work, but despite this we are still spending more than we used to on these luxury items.
There’s also a slightly worryingly trend revealed by the study which shows that 23% of us wouldn’t cut back on a holiday if money was tight, while 17% refuse to give up a TV subscription and 16% would still cling onto meals out.
If you agree with this essential list and wouldn’t cut back on something like a night out if your pay packet was frozen let me know. Alternatively if you disagree, then what would you class as an essential spend?
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