Festive Overspend

By: David Palmer

For millions of people, the Christmas break brings with it a huge financial burden. For many, owning up to a financial shortfall, failing to buy gifts and turn up to parties is not an option, so credit cards become the only option.

We are becoming a nation of debt, with analysis from The Money Charity suggesting that UK households have an average debt, including mortgages of £55,982, broken down on average to £29,930 per person.

In previous Christmas breaks, it has been estimated that one in four families start the New Year with a ‘monster credit card bill’. Half of these affected say it will take at least one year to pay off the excess spending. Meanwhile data from the Money Advice Service in recent years showed that 20% of people funded Christmas using a credit card, 6% used their overdraft, 2% borrowed money from family and a further 2% resorted to a Payday Loan company. The majority of respondent’s social pressure was the biggest cause of their overspending habits.

As part of our investigation, GettaSub asked 2,000 UK workers about their Christmas spending habits, and for insights into their financial situation in January 2019. We discovered that 29% of respondents said they overspent by between £51-200, 22% and by 201-£400. Additionally, one in ten (13%) said they overspent by between £401 – £1,000. Only one third told us they did not overspend.

These results underline the extent to which Christmas overspending is impacting the personal financial wellbeing of workers, with a worrying majority breaching their planned budgets. In our survey, January maintained its prominence as the gloomiest month of the year with over half (55%) of workers saying it was the month they were the worst off.

Running out of money was a key theme which emerged during our research, with one third of people telling us they relied on a credit card in order to survive in January. Worse still, nearly two in 10 people (19%) told us they had to borrow money from friends and family to make ends meet.

Working for improvements

The reality is that employers can and should do so much more to help workers manage New Year challenges. Research published last year suggested that UK employers spent an average of £86.44 per head on their staff Christmas party. However, offered the choice, it was said that three quarters of workers would rather their companies invested in their ongoing health and wellbeing.

Furthermore, in another poll more than 300 UK workers were asked if their employer was willing to allocate £100 to them, would they rather it went towards the company Christmas party or their health and wellbeing over the coming months. In total, 74% chose wellbeing support (such as gym and sports memberships, yoga classes, in-office talks on mindfulness and mental health awareness, and free fruit in the office) over an all-expenses-paid Christmas party covering drinks, food, entertainment and transport.

Our research speaking with 2,000 workers revealed some worrying findings about the impact financial concerns had on ordinary working people. We discovered that nearly one third (32%) said they were considering taking a second job to improve their financial situation. This underlines the serious impact a lack of support is having on the wellbeing of workers in fulltime positions.

In the last month alone, over one third (34%) told us they had suffered sleepless nights due to financial worries. Again, such issues demonstrate that being short of money is a serious problem that impacts every aspect of their lives.

Just over one in ten (13%) also told us they were planning to skip work to avoid travel costs. This finding tallies with other research from The Money Advice Service which suggested that absenteeism and productivity loss from financial distress adds an extra 4% to payroll costs for UK firms.

Overall, our research revealed serious concerns that employees overspent during the Christmas break, with a significant portion suffering severe consequences in terms of personal stress.

Recommendations

Our new research should serve as a wake-up call to UK business and HR leaders about the need to develop clear action plans to provide financial support for workers. Key recommendations we can offer include:

  • Consultation on financial concerns – Developing a system whereby employees can confide in HR professionals about their financial concerns and seek advice and support to address the problem. This programme should be clearly communicated to all staff members, with tips and advice offered in emails and company correspondence, particularly in the lead up to Christmas and the New Year.
  • End the culture of silence on financial stress – Our research revealed that many workers keep their concerns secret. Nobody wants to admit they cannot afford to buy drinks at the office party or are behind on their credit card payments. HR teams should be properly trained in this area to provide real practical support and educate the wider workforce about the dangers of debts and overspending.
  • Financial support systems – All employers should be in a position to offer help to staff in difficult financial services. For many businesses, the issue remains a challenge, with many decision-makers seeking a properly audited, regulated provider. At GettaSub, we work with organisations large and small to offer payroll-linked support, that offers employees help when they need it most.