As the cost of living crisis grips the UK, many young people are giving up on saving in favour of spending. Is that such a bad thing?
Like most people in the UK right now, I’ve started forking out more and more of my money on rent, electricity and food. With my Monzo forever inching perilously close to zero, you’d think that I’d be reining in the spending and trying to save as much as possible – but recently, I’ve found myself doing the opposite.
I’ve started picking up fresh limes to garnish gin and tonics on a Friday night. If I go out to eat, I’ll order the most expensive dish on the menu (plus a cocktail, plus a dessert) without batting an eyelid. Most recently, I bought an array of syrups – salted caramel, hazelnut, and vanilla – to go with the artisanal coffee that I got from a local cafe. Candles; bath salts; hardback books – the list goes on.
I’m not alone in this illogical, brazen behaviour. Halima, our contributing features writer, tells me they’ve been spending more on dining out as of late. Another friend of mine has recently become obsessed with the sausage brand HECK, who charge £3.20 for a pack of six (as my friend often reminds me, it’s worth it because “they’re 97 per cent pork”). Another – worryingly, maybe – is happy to spend hundreds on cocaine.
23-year-old Andy, meanwhile, tells me he’s recently splurged on seven tickets for him and his friends to see Peter Kay; “self-care bits” like face masks, journals, and a Headspace subscription; and ‘nicer’ groceries. “In the past, I might have thought ‘let me get Sainsbury’s own tin of tomatoes’, but now I’ll just think ‘fuck it, why not’, and go for the more expensive stuff,” he says. “Mutti tomatoes could be £10 a can, and I’d still cop them.”
Arguably, this shift in mindset has been on the rise for quite some time. We can trace its origins back to the pandemic: in July 2020, findings from Barclaycard revealed that Brits spent £40.6 billion on dispensable lockdown purchases – equating to around £770 per person. The majority of people splashed out on takeaways and new clothes – although one respondent bought a Slush Puppie machine, and another bought a hot tub (without actually having a garden). In 2021, writer Imogen West-Knights coined the term ‘treat brain’ to describe this collective lapse into unrestrained emotional spending.
This behaviour hasn’t dissipated with the end of lockdowns, either: according to recent ONS data, although online shopping spending is falling, it’s remained consistently above pre-pandemic levels since October 2020. Arguably, this makes no sense: back in 2020, many of us moved home for lockdown and could save on rent and energy costs. Plus, with restaurants, pubs, and clubs shuttered, we were effectively barred from spending much of our disposable income, leading to us having a surplus to splash on Uber Eats and ASOS orders. Fast forward to now, though, and many of us have reentered the private rental market and started frequenting hospitality venues again – on top of inflation surging to its highest level since 1981. We have increasingly less disposable income to play with – so why can’t we stop spending?
“I think that from a psychological point of view it makes a lot of sense to focus on enjoying the present when you are uncertain about what the future might bring,” explains Katharina Bernecker, a social psychologist with an interest in pleasure and wellbeing. “The current increase in living costs does not seem to change that trend, but could rather fuel it even further.”
Research affirms this. According to a study by the Yorkshire Building Society, around 19 per cent of UK adults have less than £100 in savings. Additionally, separate research from financial services company Fidelity found that 45 per cent of Gen Z and millennials “don’t see a point in saving until things return to normal.” Stats like these can often give rise to people like Kirstie Allsopp saying that young people could have greater financial stability and get on the property ladder if they simply gave up things like Netflix and takeaways and the gym, but analysis has shown that you’d have to give up a weekly Domino’s for over 125 years to have enough for a deposit in London. With this in mind, it’s easy to see why young people aren’t prioritising saving money (or able to do so at all).
Andy explains that he’s happy to part with his savings every once in a while as a way of dealing with his anxieties – “even if that seems counterintuitive”, he says. “With the cost of living crisis, seemingly a new PM every other week, and the climate crisis, I think I’m generally developing a stronger ‘fuck it, live in the moment’ kind of mindset,” he explains. “I don’t deny myself the little pleasures in the here and now.” Halima feels similarly: “I’m the poorest I’ve ever been, but food makes me so happy – it’s the one spark of joy I have on this terrible, terrible earth.”
It’s worth noting here that some purchases have the potential to be more ‘harmful’ than others – dropping £30 in a local independent restaurant is different to spending £30 on a SHEIN haul, for example. Plus, if you’re buying things impulsively – and perhaps using a Buy Now Pay Later service like Klarna to fund your shopping sprees – it’s unlikely you’ll ever feel the sense of satisfaction that you’re chasing. In fairness, in a capitalist, consumerist society, it’s easy to lapse into thinking that true happiness is just one more purchase away – but, of course, this is a fallacy.
“Our research shows that enjoying the present is important for well-being and mental health, however, this does not necessarily involve spending money,” Bernecker says. “It can be small experiences of taking a walk in nature or spending an evening with friends [...] happiness is linked to experiences rather than spending.” We owe it to ourselves to snap out of this materialistic mindset – and more importantly, we owe it to exploited factory workers and the environment too.
me when i have a bad day: i think i deserve a little treat— trash jones (@jzux) January 16, 2022
me when i have a good day: i think i deserve a little treat
Plus, as Bernecker says, while this behaviour might make sense psychologically, that doesn’t mean it makes sense economically. “Our own research suggests that enjoyment should be low if people cannot afford what they are buying. Their bad conscience and thoughts about their overstretched budget will undermine the experience,” she says. “Thus, overspending is probably not a good idea, neither in the short nor in the long run.”
Halima, who recently moved to London for their postgraduate degree, tells me that they often end up overspending and feeling anxious because of it. On top of “insane” living costs in the capital, they explain that as they have dyscalculia – a disability that makes it difficult to comprehend arithmetic – they can often get their budgeting wrong. “I can’t read numbers very well,” they say. “I’m trying to understand money more now that I’m in my 20s, but when you have dyscalculia it’s hard.”
It goes without saying that it would be foolish to knowingly live beyond your means, but equally, it’s a little depressing to think that we’re not really talking about foie gras or Rolex watches here. For so many young people – even those who work full-time – a chocolate bar or a weekly takeaway or 20 minutes of heating is what constitutes ‘a luxury’. Ultimately, the cost of living crisis is not a personal failing, but a systemic issue: as a despairing Martin Lewis said back in March, the current economic situation “is not something money management can fix. It’s not something for those on the lowest incomes, telling them to cut their belts will work. We need political intervention.”
Until then, as long as you’re not bankrupting yourself, excessively fuelling climate catastrophe, or funding modern-day slavery, I guess there’s no harm in buying the nicer olive oil or a new plant. If it makes you genuinely happy – as Andy puts it – “fuck it, why not?”