Families turning to loans and credit cards to fund the ‘Perfect Christmas’ - Scottish Friendly

Many British families feel pressure to create the perfect Christmas and are taking out loans or spending more on credit cards in order to buy gifts, according to new research from Scottish Friendly.

The firm’s latest Disposable Income Index (DII) shows that nearly six in ten households say they make sacrifices to buy Christmas presents and of those with children 31 per cent are relying on credit to fund their purchases.

The pressure to have a perfect Christmas and the impact this has on Brits spending habits comes from a range of sources, including other family members (52 per cent), TV advertising (38 per cent), friends (29 per cent), retailers (28 per cent) and social media (27 per cent).

With this perceived pressure affecting many Brits, more than three quarters (76 per cent) of households with children say they make some form of financial sacrifice in order to buy Christmas presents, compared to just 45 per cent of those without. Most worringly, just over one in eight (13 per cent) families who are making sacrifices say they delay paying household bills to buy presents, while one in ten (10 per cent) postpone their rent or mortgage payments.

The quarterly report, compiled in conjunction with leading think-tank the Social Market Foundation, shows that the median UK household has £1,126 left each month after paying for absolute essentials of housing, energy, water and a broader basket of goods including groceries, transport, childcare and broadband internet. These goods are required to play a full role in modern society. Money left at the end of the month is available for other key items like clothing, furniture and savings as well as luxuries like holidays.

Unsurprisingly, households with children are the group most likely to feel under pressure to have the perfect Christmas. Half of families admit to feeling this way to compared to less than a quarter (24 per cent) of households without children, which may explain why the former are more likely to be making some form of financial sacrifice.

A similar issue can be found among millennials, 49 per cent say they feel pressured to have a perfect Christmas and more than three quarters (78 per cent) report making sacrifices to buy presents. One in five (20 per cent) say are they are likely to increase spending on their credit card as a result while 14 per cent take out an unsecured or payday loan.

On average Brits anticpate spending £342 on Christmas presents this year with £303 going on credit cards. Paying back the money they borrow for Christmas is also expected to take some time with the average household saying it takes four and a half months. As a result many households are unlikely to be able to clear their Christmas debts until April 23rd 2018.

Calum Bennie, savings expert at Scottish Friendly, said: The message from economic experts in recent weeks has been that the UK is on course for the longest fall in living standards for more than 60 years as real disposable incomes continue to fall. Households should take heed of this warning and make sure they have contigenices in place to cope with an increase in spending and to ensure they are not left feeling the pinch far into 2018.”