6th June 2022
Brits spend 54% of earnings on discretionary costs despite record inflation and global recession, OLBG Index uncovers
Average UK adult spends £13,470.40 per year, or £1,122.53 per month, across 12 discretionary spend categories – 54% of average after-tax earnings
£3,098 per year – or £60 per week – MORE than financial experts believe we should spend according to 50/30/20 rule
Adults spend 62% MORE TODAY than in 2019-20 when individuals spent £8,279 (34%) of annual after-tax earnings on discretionary costs
Post-Covid spending boom far from over despite deepening cost-of-Living crisis, threat of global recession and warnings of 10%+ annual inflation
Sun-seeking Brits splash out 12% of after-tax earnings on family holidays
Rising fuel costs burn 24% hole in average incomes with DIY number 1 with 24.5%, Tobacco (17%), Holidays (12%) and Eating Out (7%) making up Top 5
June 2022 – The Post-Covid spending boom is far from over with the average UK adult splashing out more than £13,400 a year – 54% of their annual after-tax income and 62% MORE than in 2019-20 – on discretionary costs despite the country facing record inflation and a global recession, [LINK] the OLBG Discretionary Spend Index has uncovered.
Ahead of updated government cost of living figures on 10th June, Online Betting Guide (OLBG) research suggests that while many individuals and families are buckling under the pressure of the cost-of-living crisis, the majority of UK adults are failing to cut back and continue to spend large sums on non-essential goods and services.
The OLBG Discretionary Spend Index tracks average discretionary spend per UK adult (excluding including living costs) across multiple leading brands including Netflix and Just Eat, within 12 popular consumer categories, and benchmarks these findings against official Office of National Statistics (ONS) data.
How average UK adult spends their spare cash
The Index found that Brits are choosing to ignore the Bank of England’s warning of 10%+ annual inflation, and a looming recession, by spending £13,470.40 of their annual average salaries across areas including streaming, transport, takeaway food, holidays and pets.
This equates to 54% of an average UK adult’s median after-tax salary of £25,031 (£31,772 pre-tax) – approximately £3,098 more per year, or £59.57 per week, than financial experts believe we should spend according to the 50/30/20 rule.
Financial advice suggests working adults should follow the 50/30/20 rule: spending 50% of income on essentials including housing and food, 30% on 'discretionary spending' and 20% in savings.
Brits (including smokers) spend a combined 84%, or £11,376, of their average earnings per year on the top five most popular discretionary spend categories. This includes: DIY and house renovations (£3,304); fuelling and maintaining their vehicles (£3,258); tobacco (£2,294) if they are smokers, of which there are 14% UK adults; holidays abroad (£1,596) and £924, or £17.70, per week eating out.
Non-smokers meanwhile spend 72% of their after-tax income on the top 5 categories including £644.40 a year on takeaways which ranks fifth out of 12 for these individuals.
End of Covid restrictions sparks discretionary spending spree
The OLBG Index benchmarked its findings against 2019-20 official figures with some startling results.
In 2019-20 the average UK adults (including smokers) spent £8,279 – or 34.3% of their annual after-tax earnings – on discretionary costs equating to an overspend of just £356 compared with 54% and £3,098 in 2021-22.
A UK non-smoker in 2019-20 spent £6,303, or 26% of their average annual earnings, on discretionary costs. This is an underspend of almost £331 when benchmarking against the 50/30/20 rule.
It may come as no surprise that Brits have spent a substantial chunk of their income during the last two pandemic-interrupted years on DIY (366% increase from 2019-21). A combination of recurring lockdowns, working from home and retail closures, has meant UK adults UK invested more time and money in home improvements.
The rise in fast-food home deliveries and delivery services has also driven a 320% rise in takeaway spend from just £153.26 in 2019-20 to a whopping £644.40 in 2021-22.
Transport has accelerated into the third highest spending rise with adults spending 59% more of their average annual after-tax earnings on buying, fuelling and maintaining their motors with prices at the pumps reaching record levels this month.
One of the lowest rises in costs in recent times has been within the mobile (voice & data services) category, with only a 14% rise in price from 2019-21. Netflix, the world’s favourite streaming service, although experiencing declining subscriptions, cited a 28% price increase during this time period with the average monthly subscription cost now setting consumers back £10.99.
The average Brit also spends more today than in 2019 on travelling abroad (12%), a direct impact of borders reopening and Covid testing restrictions being lifted.
And finally, it really is a dog’s life as pets across the UK are being treated to more of our annual income after tax, with £242 spent per year on treats, grooming and accessories, 30% more spend than two years ago (£186).
OLBG’s Index includes 12 categories classed as discretionary costs and does not include living costs, money the average UK adult spends on essentials such as food, housing and energy.
Median average earnings is the value below which 50% of jobs fall. This is the Office of National Statistics’ (ONS) preferred measure of average earnings as it is less affected by high earners and the skewed distribution of earnings. It therefore gives a better indication of typical pay than the mean.
Top 12 discretionary spend categories
With fuel and energy prices soaring and set to rise further this year, OLBG found UK adults spend the following on 12 most popular discretionary goods and services: (in order of spend)
£3,304 (24.5% of average annual earnings) spent on DIY and home improvements
Almost a quarter (24.1%) of annual average earnings (£3,258) spent on motoring and transport – increasing fuel costs have continued to impact motorists
£2,294 (17%) on tobacco products
12% of earnings, or £1,596 per year, on holidays abroad
£924 or 7% of average income on avoiding cooking at home and eating out
£644.40 a year (4.7%) on takeaways
Over £500 (3.7%) a year consuming alcohol
£267 (1.9%) on gambling including lottery tickets
1.7% (£242) on keeping pets happy and healthy
£240 (1.7%) on mobile services
An average of £148 per year (1.1%) on hairdressing
£49 on average (0.3%) streaming our favourite binge-able box sets and movies
(Living costs/Essentials not included: (Food & Housing), Energy, Childcare, Travel/commuting
A senior City economist, said: “OLBG’s Discretionary Spend Index shows that UK adults are choosing to remain within a post-Covid overspending bubble when money saved from lockdowns and low interest rates were the norm.
“The economic landscape, however has drastically changed in the last few months and people spending 54% of their earnings on holidays and takeaways need to quickly realise that a downward financial spiral is not just around the corner, it is sweeping up millions of workers today and that they will be next if they don’t start cutting back.
“With post-tax household disposable income forecast to fall by 2% this year – the biggest calendar-year drop since 2011 and the second-biggest since the BoE's records began in the 1960s – and only 1 in 10 employees receiving a pay rise to counter rising costs, according to a recent study, OLBG’s findings are a stark reminder of just how much we ALL need to start tightening our purse strings and spend less on discretionary goods and services, many of which we could do without.
“With bleak budgetary news ahead and the holiday season fast approaching it will be fascinating to see whether Brits can reign in their discretionary costs and not spend above their means as soon as the sun comes out.”
Online Betting Guide is a sports betting community that has enabled sports fans to share their experiences of online betting since 2002 to help players make informed choices about which bets to place and where to place them.
It has created the OLBG Discretionary Spend Index to measure 12 core entertainment categories across the UK, including online sports betting and casino gambling. The Index tracks and reports on UK adult discretionary spend and will update its figures every quarter to build a detailed picture of how the rising cost of living is affecting the public purse.
OLBG is committed to promoting responsible gambling and has produced a detailed guide highlighting all the features and tools offered to players from online bookmakers and how to stay safe when gambling online.
OLBG (Online Betting Guide) was established in 2002 to guide UK bettors on where and how to place bets online in the early days of online betting. Between 2003 and 2004, a tipster competition and forum was added to the site and it grew to become the world’s biggest community of sports bettors who share their knowledge to help others improve their betting.