According to research published today by insurance, retirement and investment group LV=, spending on the nation's top ten "lifestyle essentials" reached £143 billion over the past year, the equivalent of £5,629 per household on average, and the highest sum over the ten year period of the research.
The LV= Lifestyle Inflation Index has found that the cost of "lifestyle essentials" rose 4% in the year to August 2010, ahead of the official headline rate inflation of 3.1% (Consumer Price Index) and more than twice the rate of increase of the nation's pay packets (1.7%).
After enjoying five years of earnings outstripping changes in the cost of these lifestyle essentials (between 2002 and 2006), household incomes have fallen behind, but this has not yet dented Britain's attachment to a variety of little luxuries .
Households spent the greatest sum on weekend breaks and holidays over the last year, at nearly £79 billion. Meals out accounted for nearly £19 billion of household spending and home deliveries and takeaways exceeded £11.5 billion. 35% of households admit to reducing their spending in other areas to continue to fund these ongoing aspects of their lifestyle.
While men and women both place weekend breaks and holidays at the top of their lifestyle lists (men 48% and women 53%), one in three (36%) women placed professional hair styling high on their list of priorities, compared to just 8% of men. On the flipside, nights out in the pub (29%), TV subscriptions (26%) and sports club membership (15%) featured highly among male lifestyle essentials.
Psychologist Corinne Sweet commented: "In tough financial times people still need to 'treat' themselves to compensate for stress and hard work, so it's not surprising that spending on holidays and weekend breaks have stayed buoyant.
“People definitely need the psychological boost that good haircuts, a decent choice of TV channel and a night out with friends can bring, despite being aware of needing to watch their pennies
“Finding a balance is important, so people will happily use the car less in order to have a night out to stretch their money further. Thus, "lifestyle essentials" are basically stress releasers, and people value them highly, particularly in difficult times."
Overall, two-thirds (69%) of people have taken measures to tighten their purse strings recently. 35% say they have cut back in some areas to maintain their spending on "lifestyle essentials", of which:
• A quarter (24%) are switching utility providers to reduce bills
• Nearly half (45%) are buying cheaper / no brand foods
• A third (34%) are selling items they don't need on eBay or at car boot sales
• One in three (32%) are taking their own lunch to work
• 30% are using their car less to save petrol
Mark Jones, LV= head of protection, said: "The years of plenty have changed people's expectations of what's essential in their daily lives, and it's clear that millions are determined not to let the credit crunch cramp their lifestyle. Of course this won't always be possible, and I would urge people to consider now how they would continue to pay for the real essentials and at least some of these little luxuries should their circumstances change.
"We insure our cars, phones, and even our Sky box in case they stop working, but often not ourselves. With over 2.2m people in the UK unable to work due to long-term sickness people are just as prone to 'breaking' and the financial consequences can be much more severe. Most people couldn't survive financially on an income of around £5,000 a year, which is what the state provides for long-term sickness, so income or lifestyle protection is the one insurance that everyone should have."
