Britons' social lives sending them into debt, study finds

http://www.theguardian.com/money/2014/jun/24/britons-social-lives-social-debt-study

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Why is Britain sinking in a sea of debt? It's because we spend too much down the pub, according to a survey that found half of all adults blame the demands of their social lives for going into the red.

The Money Advice Service, set up by the government, said that the average "social debt" among overspending adults is £1,260, with more than half of people saying they spend more than they plan to on social occasions.

Fear of appearing tight or stingy is fuelling overspending, said MAS. Two out of three people said they spend more on a round of drinks than they get back, and a third said they lose out when the bill is split in a restaurant. A lack of self-control is another reason for "social debt", with 36% simply "getting carried away" and overspending.

But it's not just pubs and eating out that is throwing people into debt. One in six admitted to researchers that they head off on holidays that they can't afford.

Individuals need to learn to say no to drinks, meals and holidays that break their budget, said MAS money expert Jane Symonds.

"I'd urge anyone in debt, due to their social spending, to take action now to avoid getting any further into the red and instead work at clearing it," she added.

"You'd be surprised at how empowering saying no can feel when you see how healthy your bank balance looks, and you can spend the money on things you really value or need."

Being honest about how much money you have is crucial, said social psychologist Jenni Trent Hughes: "It's really easy to be swayed by peer pressure, become carried away in the moment and spend money that the next day you wish you still had in your bank account.

"If you're honest and clear with a friend about why you can't afford to spend money on something and you still find yourself being put under pressure, it's perhaps time to have a quiet word with them or even rethink the friendship - real friends wouldn't pressure you to do something you really can't afford."

But the urge to spend and keep up with the Joneses is hardwired into humans, according to a separate report by Nick Chater, professor of behavioural science at Warwick Business School. Human make judgments instinctively using comparison, and this extends to how we value houses and cars.

"It's the dark side of consumerism" said Chater. "Everybody values their car or house relative to other cars or houses. That means as everybody gets wealthier they get a nicer house or car. But because people think comparatively, they don't gain any benefit, they don't feel happier. They still have the third nicest car among their friends"

Comparing and competing can have positive outcomes, such as wanting to be healthier or obtain a better education, said Chater.

"But for many consumer goods, keeping up with the Joneses may be all we care about. If we all spend more on weddings, fast cars, or designer handbags, then, in comparative terms, no one feels any happier. This raises the danger that such spending is self-defeating, from the point of view of a society as a whole."