As the holiday season arrives, British consumers have been found to spend up to a quarter of their disposable income on holidays throughout the year and show no sign of reducing the spend.
A recent spending report from Nationwide showed that on average British consumers holiday twice per year, spending around ?855 per person each time. 23 per cent were found to spend over ?1,000 per holiday.
Considering the average annual disposable income in the UK of ?27,300, this means that holiday spending can be equivalent to three months’ earnings, or a quarter of annual income.
The worrying aspect of the research is that it seems not all have the funds available for their desired holidays.
22 per cent said they had to borrow money to go on holiday, which included using a credit card (15 per cent), taking out a personal loan (4 per cent) or borrowing money from friends or family members (3 per cent). 43 per cent were able to pay for holidays from savings, while 35 per cent had the money available in their current account.
The consumers that borrowed money for holidays mainly confirmed that this was necessary, with 88 per cent saying that it was the only way they could afford the trips.
The problem can be made far worse by overspending on holidays. 61 per cent of those surveyed said that they overspent on their holidays, going over budget by an average of ?250 per main holiday. 11 per cent admitted to overspending by more than ?500 per holiday.
Those borrowing money to go away confirmed that it took around three months on average to pay the money back, with 11 per cent stating that it can take more than six months.
The general advice is to save in advance of holidays, perhaps by cutting back on unnecessary spending on things such as meals out and other luxury expenses.
A bit of planning and cutting back beforehand while you still have the holiday to look forward to can save a lot of money in interest and stress compared to repaying debts after all the fun is over.