The average UK family is set to allocate over half (53.6 per cent) of their monthly salary, approximately £1,546 based on the national average monthly wage of £2,886, to cover the cost of the festive season. Credit management firm, Lowell reveals that parents are worried their children will adopt these bad habits.
The survey explored how much households are relying on credit products like buy-now-pay-later (BNPL) and credit cards to manage Christmas expenses. Seventy-four per cent said repayments will likely stretch to April, while 15 per cent of households believe it will take six months or more to pay off their debts.
Affording bad habits
While the majority aim to budget carefully, 18 per cent of respondents anticipate spending 80 per cent or more of their income on festive costs, which could leave them struggling to cover everyday expenses and priority bills.
Even those who are planning to budget for Christmas and the holiday season have found themselves turning to credit cards and services like BNPL to spread the financial costs of gifts and celebrations. This year, 74 per cent of families say they will rely on credit to cover their Christmas expenses. Usage is notably higher among younger adults aged 25-34 (87 per cent) compared to older generations aged 45-54 (58 per cent).
Adding to this challenge 72 per cent of parents believe their children are likely to mirror their financial behaviours. With this in mind, Lowell has partnered with financial charity MyBnk to share some top tips on how to set a positive example over the festive period.
Mirroring behaviours
The festive season often brings heightened consumption, making spending habits more noticeable. When surveyed about the financial behaviours they observe in their children, parents identified several patterns.
Encouragingly, 61 per cent of parents reported that when they modelled budgeting habits, these behaviours were reflected in their children. Similar trends were noted for price shopping (49 per cent) and couponing (28 per cent). However, less desirable behaviours such as impulse buying (21 per cent), retail therapy (20 per cent), and overspending on non-essentials (16 per cent) were also reflected in their children’s habits.
Financial behaviours children mirror from their parents
Percentage
Budgeting
61%
Price shopping
49%
Couponing
28%
Impulse buying
21%
Engaging in retail therapy
20%
Overspending on non-essentials
16%
These findings highlight the importance of parents being mindful of their own spending habits during the Christmas period, as they can have a lasting impact on their children’s financial attitudes.
Protecting children and young people
Highlighting the broader implications of festive spending, financial education charity MyBnk noted: “It is well-researched and documented that children learn through role models and mimicking behaviours that they see demonstrated, particularly by those closest to them such as their parents. It is of little surprise then that parents’ financial habits can impact the behaviour of their children with money.
“Reports by organisations such as TSB and MaPS have found links between parents’ financial habits and an impact on their children – whether that be a willingness to talk openly about money matters or their children replicating their impulsive spending behaviours.
“The festive season is synonymous with overindulgence and overconsumption. Social media becomes awash with parents showcasing mountains of presents and consumerism. However, it is often followed by posts in January about managing credit card bills, tightening belts or spending in the sales to get ahead of the curve for next year. This ‘yo-yo’ spending and saving culture can have a negative impact on children and young people”
Avoiding overspending and overconsumption
To help parents encourage positive financial habits during the festive season, Lowell has partnered with children’s financial charity MyBnk to share effective strategies for avoiding overspending behaviours in children.
A spokesperson from MyBnk explained: “The Bank of England reports that we spend 29 per cent more in December than other months which is a significant addition to most families’ budgets. For some, this is done through saving and careful planning whereas for others it might be overspending. Modelling positive behaviours for our children is always the best option, however, nobody is perfect.
“When parents can’t do this, having age-appropriate conversations about feelings of regret or what would have been a better strategy can offer young people a way to understand the good and bad money decisions we make.
“Do you remember writing a wish list as soon as the festive season came around? Circling toys in the Argos catalogue? You can still encourage your children to do this, but get them to write down costs of each item and set them a spending limit. Encourage them to make decisions based on a set amount and budget for the items they would like.
“Equally, you could get them to write a wish list and include reasons why they want the items. Getting them to think through their motivations can help them decide what is most important to them and bring home the fact that maybe the cost isn’t the most important factor. By encouraging children and young people to make choices about these items they are learning lifelong lessons about budgeting, needs and wants, and future financial planning.”
Fostering positive financial habits
John Pears, UK CEO, Lowell
Commenting on the research John Pears, CEO at Lowell said “As children are increasingly exposed to consistent advertising, whether that’s on TV, or through social media adverts, this can deliver an increased expectation of Christmas gifting and spending. Our data has shown that the behaviours parents exhibit to their children can have a significant impact on their children, so it’s important to foster these positive financial habits, to set them up for the future.
“With 74 per cent of parents paying on credit for their Christmas period, it’s important that you assess the affordability of making repayments. It’s worth involving your children in conversations around gifting to help manage their expectations around financial spending, as well as fostering positive financial savings habits.”
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