Discretionary spending still going strong

Tuesday, 1st September 2009 09:26 - by Resident IFA

An alternative way to describe discretionary spending is those non-essential purchases we make i.e. a day out, a restaurant meal, etc. Over the Bank Holiday weekend, I watched a live Premiership football game and visited one of Kent’s many castles. Both venues were very busy. You could argue that the Premiership football club would always have 41,000 (and substitutes) ready to watch them whatever the financial climate, and the weather on Monday was fantastic to guarantee good numbers at the castle. Whatever the contributing factors, people still seem to be spending strongly on the ‘luxuries’ in life. Is this a knock-on effect of the low interest rates and lower mortgage payments a lot of households are now enjoying? Is it a reflection of the viewpoint held by many that ‘things aren’t so bad’ and that the UK is shortly heading out of Recession? I always enjoy the life insurance companies’ standard ‘Sales Aid’, showing the effect of cutting-out a daily retail coffee purchase or stopping buying two packs of cigarettes per week (saving, say, £40 per month). This is a positive message on how easy it is to protect your family, backing-up my favourite ‘Ditch the Sky TV’ example. My take on why I have the feeling that discretionary spending is holding up is that it is a combination of the above possible answers. People may well be cutting back on certain expenditures – perhaps buying cheaper brands at the supermarket – although it seems that the pleasant experiences and discretionary activities they hold dear are high priorities and will not cease. I do not, however, write this Blog entry forgetting the ever greater numbers of redundancies and those unemployed. What do you think? Are you managing to maintain your pre-Recession lifestyle? Have you changed any of your spending habits? Perhaps your mindset has not altered one iota, believing the same as someone else I recently heard say that they “refuse to participate in the Recession”? Until next time...