To be brutal the growing need for people to spend out in order to impress friends is good for retail and other consumer businesses. But will the short-term fix balance the longer-term trend that will lead to growing national debt, rising IVAs, personal bankruptcy and ultimately recession?
Impressing friends with high social spending, showing off designer clothes and splashing out on flash cars are just some of the symptoms of a growing social disease.
A new study reveals that Brits are spending £45bn annually just to keep up with the Joneses. One in five admit to overspending due to peer pressure, with the average person spending £5,874 beyond their means each year. The study has been conducted by online credit monitoring service CreditExpert.co.uk.
Over a quarter of Brits admit they are pressured into digging deep because they’re embarrassed about their financial situation so go along with peers to avoid questions being asked.
However, being image-conscious is the main reason for Brits spending too much in social situations, with 37% feeling insecure about not fitting in.
In terms of what we are spending money on, nearly half of Brits feel pressured to buy large rounds of drinks and the same number feel compelled to spend more than planned on gifts for friends and family.
One in four try to impress on dates and, as a result, splash out more than they can afford – and it’s no different at work, with 38% saying they contribute more money than they would like on colleagues’ leaving or birthday presents.
The study of 1,450 people also found:
- Britain is a nation of fashionistas, with 12% spending more than £100 a month beyond their means on clothes
- Men admit to overspending on their motors by £1,964 extra a year to keep up with their car-fashion-conscious friends. By comparison, women overspend on motoring by just £1,068.
- People in the East Midlands, Wales and Scotland are the most worried about being considered tight with their money, while those in the West Midlands and North West are least bothered what people think about them.
- Impressionable teens and young adults (18 to 24) are the most likely to succumb to peer pressure purchases. 41% admit they spend over their means to keep up socially, compared to the national average (19%) and almost two thirds cite not wanting to miss out as the reason for their overspending.
- The Capital’s residents are the most susceptible to peer pressure spending, with a quarter saying they have spent more than they intended due to social pressures. It seems that the further North you live, the less inclined you are to succumb to keeping up with the Joneses; only 14 per cent of those in Scotland and the North East spend money they don’t want to.
Jim Hodgkins, Managing Director of CreditExpert.co.uk, said, “It’s staggering to see how much we’re overspending just to keep up with our peers. While it’s great to be generous at the bar or on a date, we should be spending because we want to and not because we feel pressured. Spending beyond your means because of peer pressure can result in mounting debts which could lead to a bad credit rating and, unfortunately, if your credit rating is unattractive to lenders, they will be less inclined to offer you credit – which means you could then miss out on the new car or flat you’ve fallen in love with.”
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