Spending falls in April as we stay at home
A cornerstone of budgeting understands the difference between essential and non-essential spending.
Non-essential, or discretionary spending can be more readily switch-off than our committed expenditure, offering some flexibility within budgets when times are tight, or we want to allocate more money towards long-term goals.
There are times when essential spending can be cut back too.
According to new research, essential expenditure fell by 6% last month when compared to April last month.
The data from Lloyds Bank shows this fall in spending as the country spent its first full month in lockdown.
This fall in spending in April was driven by a decline in spending money on travel.
Fuel spending fell by 58%, with day-to-day commuting costs down by 86%. Combined, these two areas of spending represented more than half of the total fall in essential spend last month.
Other areas of essential spending to fall last month included the cost of health services, such as visits to the dentist and opticians. Spending in these areas was down by 55%.
One area of spending to increase in April was our supermarket spend, with 18% more spent year-on-year in April, continuing an upward trend first reported in March.
The biggest regional fall in essential spend was reported in London, down 9% compared with last year. The South East of England was close behind, down 8%.
The North East, and Northern Ireland, saw the smallest contractions in essential spend growth, each at 3%.
With essential spending on the decline last month, non-essential expenditure also took a tumble.
A month earlier, when the national lockdown was introduced on 23rd March, discretionary spending was down 21% when compared to last year.
In April, discretionary spending fell further to 42%.
The biggest contributors to this fall in non-essential spending included holidays and restaurants, down 94% and 75% respectively.
One area where we collectively spent more in April was charitable donations, up by 4% compared with last year.
Gabby Collins, Head of Payments at Lloyds Bank, said:
The heavy falls in total spending seen in April – particularly in areas such as holidays and commuting – were expected following the guidance from the UK Government to ‘Stay at Home’.
However, the eventual impact on people’s finances is going to be harder to predict, with many experiencing drastic changes to their financial situation due to the pandemic.
It may sound simple, but taking some time out to review your current finances, can help you budget for the coming weeks and months.