Shoppers are set to stretch tightening household budgets and splurge £2.6 billion this Black Friday¹ – that’s £1.8 million a minute.
Instead of binging on clothes you’re never going to wear and tech that will remain boxed up beneath the kitchen work surface, re-prioritise and put your future self first this weekend.
You might not be nabbing the bargain you think you are, anyway. An investigation into last year’s deals by consumer group Which?, shows that 60% of the deals on offer cost the same or less before and after Black Friday.
The carefully curated shopping frenzy encourages Brits to binge – nearly a third of people admit they’ll be wasting money this Black Friday². Over three-quarters will end up spending more than they normally would do, lured by the prospect of big savings³.
Debt-fuelled Black Friday
The Black Friday season is notorious for encouraging shoppers to go into debt to fund some unnecessary supermarket sweeps. This year, nearly a quarter of purchases will be done on a credit card4.
Although interest rates are still low to encourage consumer and business spending, the recent rate hike from the Bank of England means it will be more expensive to pay this debt back than last year.
Unfortunately for the consumer, debt levels are concerning. The ratio of household debt to gross domestic product is back close to the peak seen in the pre-financial crash boom years. Shoppers need to be careful before they flash the plastic.
Whilst Christmas is seen as a time for family, Black Friday ‘tis the season for self-gifting. Although Christmas is just four weeks away, just 8% of Brits plan to take advantage of the sales to do their festive shopping4.
All of this means Brits are expected to spend £10.1 billion in the Black Friday week, as bargain fever sees shoppers spend 4% more than last year5.
Realistic personal finance
At a time when household budgets are being squeezed by rising inflation and stagnant wage growth, and personal debt levels are close to a crisis point – should we shift the way we think about saving money this Black Friday?
It’s important to reevaluate your priorities and remember that your future self deserves looking after as much as the current you.
Now, the problem with the wealth management industry is that it’s often just not realistic. You deserve to treat yourselves to nice meals with friends, new luxury clothes, and the latest tech that will help us achieve our wellness goals. If you can get something you’ve had your eye on for a while at a bargain this Black Friday, treat yourself.
We know that wealth is about more than just how much money you have in the bank. It’s the memories you create with your family and the feeling you get when you return home after a long day at work and sink into the sofa.
But it’s also the stability you have in knowing you’ll be financially OK if something goes wrong in the future. Brits often overlook the importance of financial security when they embark on the road to personal wellness.
We all have those big life goals we want to achieve, whether it’s getting on the housing ladder ourselves, or giving our children help with a deposit, that big family holiday, or our dream retirement. You might even want to treat yourself on a designer coat you’ve had your eye on for years.
In a country where the savings gap is set to rise to £350 billion by 2050, savers are going to have to find an additional £10,000 a year between now and retirement to plug it. When the purse strings are already tight, redirecting money that you would have wasted on items you don’t need to your future you fund can take you one step closer to your goals.
The best way to save this Black Friday
It’s important to remember this economic environment is not one for savers. With inflation outpacing the returns available on cash ISAs, the purchasing power of money kept in savings accounts is being eroded over time.
Say you kept £10,000 in a cash savings account offering a 1% interest rate, you’d have £10,100 after one year. If inflation runs at 2%, you’d need £10,200 to account for higher prices. As the return on your cash savings account has failed to keep up with inflation, you won’t be able to buy as much with your money as you could last year.
Instead, look for inflation-beating returns on the financial market and make your money work harder you. A diversified investment portfolio tailored to your risk tolerance can help you protect your money and grow it for the future.
Remember you can maximise your returns by investing in a stocks and shares ISA. You can put up to £20,000 in your ISA a year, and any increase in the value of your investment and any income can grow tax free.
Life is about balance. Treat yourself this Black Friday and invest for your future.
1 VoucherCodes and the Centre for Retail Research
2 Charities Aid Foundation
3 National Savings and Investments, 2015
4 Black Friday 2017: UK households set to spend £3bn, Independent, 07.11.2017
5 UK shoppers forecast to spend £10bn in Black Friday sales, Guardian, 17.11.2017
6 Deloitte
