Seasonal excess leaves many with a financial hangover
Many of us have suffered the next day after over-indulging over the festive period, but research from Halifax has found more than half of consumers will still be enduring a 'financial hangover' well into 2014.
With the average amount being spent on Christmas hitting £482 in 2013, more than half (55%) of consumers are now having to make cutbacks in order to cover the outstanding cost of it.
More than a third (35%) of British consumers said they are still paying for the festive season long after the decorations have come down, and 6% expect to still be feeling the pain this summer.
Recriminations and regrets
An increase in festive spending since 2012 has contributed to this financial hangover, with 31% having spent more than they did in the previous year, and a high proportion (29%) admitting they overspent this Christmas. Almost one in three people (29%) spent more than £500 on Christmas and 9% said the total cost of their seasonal spending was in excess of £1,000.
The main reasons for overspending were people not wanting to disappoint their family (41%), or wanting to have the 'perfect Christmas'.
Reasons behind Christmas overspending
I didn't want to disappoint my family 41%
I wanted to have the perfect Christmas 31%
I lost control of how much I had spent 16%
I ended up panic buying at the last minute 13%
I didn't want to be seen to be spending less than my friends 4%
Source: ICM Research
When it came to spending nearly three quarters (74%) said they had no regrets when reviewing their actions. Despite this, people's situation post-Christmas means one in five people (20%) are now cutting back on 'non-essential' activities. The extent of overspending for some (12%) means that they are now worried about how they will pay utility bills, with the same proportion concerned about food bills, and 5% have concerns about making their mortgage or rental payments.
Counting the cost of Christmas
Most people paid for Christmas using a combination of their current account, credit card and savings. More than two thirds (67%) used their December salary, with 55% dipping into their savings, and a third (34%) using a credit card. However, 14% went into their overdraft and 7% resorted to a payday loan.
How we paid for Christmas
Type of spend - Total who spent
December salary 67%
Savings 55%
Credit card 34%
Other 20%
Overdraft 14%
Store card 12%
Borrowing from family and friends 10%
Payday loan 7%
Source: ICM Research
Richard Washington, Halifax credit cards; said: "The festive season can be a time of excess and there is pressure on people to deliver the perfect Christmas.
"Creating and sticking to a budget can certainly help prepare for the costs of Christmas. Using a credit card to pay for purchases, and having a plan for how you will then pay off Christmas, can mean that you don’t have to dip into your savings, and there is more in your current account. In the New Year, transferring balances to a new credit card can allow the cost to be spread over a longer period at a lower rate of interest."