Every year, we spend our hard-earned money on all sorts of essentials and non-essentials, from food and utility bills to holidays and evenings out.
So it’s interesting to observe how much people prioritise what might be termed discretionary purchases even when the economy is going through tough times and money is tight.
According to data from Barclays, soaring living costs have prompted consumers in the UK to cut back on new clothes and home improvements. But at the same time, people are continuing to spend heavily on experiences, such as holidays, social occasions and live entertainment.
So what does this say about us and our spending habits during difficult economic moments?
In this climate of high inflation and sluggish economic growth, you might think that people would be prioritising vital day-to-day and long-term expenses, from energy bills to home improvements.
But instead, it appears that shared, communal and memorable moments really matter to people, and that we’re willing to spend serious money on making precious memories.
For example, figures from Barclays show that spending on entertainment went up by 7.5 per cent last year, thanks to major events such as Beyonce’s Renaissance tour and the Eurovision Song Contest in Liverpool.
Cinemas, meanwhile, saw a 6.3 per cent surge in spending, partly due to blockbuster movies such as Oppenheimer and Barbie.
Similarly, 2023 was a bumper year for the travel sector, with spending at travel agents going up by 10.4 per cent and airlines seeing an increase of more than 30 per cent.
There will be many factors behind this trend, not least the legacy of the pandemic. Many people will still feel they’re making up for lost time following the Covid lockdowns, and the experience may have given them a newfound desire and appreciation for experiences that take them outside their own home.
At the same time, the prevailing mood of political and economic chaos and uncertainty may be having a big psychological impact. For instance, if you’re struggling to make ends meet, or believe certain lifestyle goals seem very distant right now, you may adopt a you-only-live-once approach to life and want to make now count for something.
As you’d expect, we’ll be the first to say that good financial management is crucial to your long-term happiness.
But at the same time, we’ll happily acknowledge that life is for living, making precious memories with loved ones and doing what makes you happy.
You can have both by making sure you’re striking the right balance, so you can be confident you’re living within your means, and not compromising your wider financial situation.
Think about your priorities, what drives you and what you want out of life, and then you can make sure this is accounted for in your overall financial plan.
Our specialist financial planners can work with you to devise a strategy that reflects your goals, circumstances and priorities, so you can live the life you want to live, both now and in the future.
If you have any questions about devising a financial plan that meets your short and long-term needs, please don’t hesitate to get in touch.