Tomorrow is Black Friday; will predictions of record spending over the weekend prove accurate?
The famous sales weekend, which follows on from Thanksgiving Day in America, is one of the biggest shopping events in the UK retail calendar.
Retail outlets and online sellers expect a huge number of people to be on the lookout for the best deals as they get ready for Christmas.
At Applewood Independent we anticipate:
- Record spending figures on Black Friday.
- Many manufacturing businesses making big profits from the surge in sales.
Spending habits
In the UK (generally speaking) people have more savings now than they’ve ever had in their lifetimes. Whilst some business owners and employees have experienced financial turbulence due to lockdown, others have benefited from furlough and a reduction in expenditure.
There’s been a lack of opportunity to spend money on overseas holidays. People have spent less on frivolous items, and, due to restrictions, have saved money by staying at home instead of going out; all of which increases the likelihood of a bigger spend this weekend.
The post-lockdown picture
I’m 35 years old – most of my generation borrows money with little hesitation. Many of them are in debt. Our parents and grandparents, who are approaching retirement age, currently have very good investment portfolios. Some have been able to invest more (due to the reduced opportunity to spend) and have successfully doubled or tripled their portfolios. Christmas expenditure is of no concern to them.
However, millennials typically buy everything they want “now” and readily accept the “pay later” sales tactics. We are the opposite of our grandparents and parents who saved money and lived within their means; this can lead to risk-taking behaviours with negative consequences.
There are three main reasons that millennials will spend more on Black Friday this year:
- They want to “make up” for the social hardships endured last Christmas.
- They want to keep up the appearance of having disposable income and ensure that their families and children enjoy the same luxuries as the rest of their social circle.
- They might have more money to spend due to reduced activity during the pandemic.
The knock-on effect of spending more this Christmas
If the people who are now spending more want to get onto the property ladder, they risk eating into any savings they have for a deposit; this could result in the property market slowing down. If interest rates go up in 2022, the property market is likely to be less buoyant.
Everybody wants to enjoy the winter holidays (whether they celebrate Christmas or not), without worrying about the consequences of what they’ve spent. If you are sitting on a healthy savings balance right now, think twice about blowing it all on one Christmas.
Four easy ways to avoid overspending this Black Friday
Here are four tips to help you avoid going on an unnecessary pre-Christmas shopping spree this Black Friday:
- Take the long view and carefully consider how festive spending will impact your future plans (for example your deposit for a home or paying winter utility bills).
- Spend within your means, and if you decide you must borrow, explore the terms and conditions in depth.
- Forget about keeping up with your peers; make the most of time with your friends and family.
- If you don’t “need” to buy anything, avoid the temptation to see what’s available on Black Friday – out of sight, out of mind!
You can still enjoy nice presents, good food and quality time with loved ones without creating a financial hangover for 2022.
Three very simple questions to ask yourself
If you’re tempted to splurge the cash, ask yourself the following three questions:
- Is this purchase 100% necessary?
- Am I buying purely to snap up a “bargain”? (It’s only a bargain if you really need it!)
- How will spending X on this item impact me and my family financially in the long term?
Of course, with a solid diverse investment portfolio, supported by a good independent financial adviser, you can rest easy knowing that your funds are working hard for you in the background (so if you do decide to treat yourself to that new plasma TV, you can feel a bit better about it!).
For more information and to discuss how Applewood Independent can support you to manage your investments, email alex@applewoodindependent.co.uk.
The views expressed in this article are those of the author and do not constitute financial advice. Applewood Independent Ltd is authorised and regulated by the Financial Conduct Authority. For financial advice designed for you and your specific circumstances, please contact the author using the contact details provided in this article or, alternatively, contact the Applewood Independent Ltd office on 01270 626555.
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