Where is the UK Spending Less or More?

The cost of living crisis in the UK has seen food become more expensive, rising prices at the pumps and many more increased costs.

cost of living

But what does this mean for our disposable income?

According to research by Online Betting Guide (OLBG), the average UK adult spends just over £13,470 a year across 12 discretionary spend categories, including:

  • Takeaways
  • Eating out
  • Hairdressing
  • Holidays
  • Streaming services and TV subscriptions
  • Transport
  • Mobile phone services
  • Pets and petfood
  • Home improvements
  • Alcohol
  • Tobacco
  • Gambling

OLBG have compiled the data to create the Discretionary Spend Index, outlining what the UK public are splashing their cash on this year, compared to previous years.

They discovered we’re spending 54% of our average after-tax earnings on the categories outlined above — which equals nearly £1,123 a month on discretionary costs.

If we compare this to the 50/30/20 rule recommended by financial experts — where we’re advised to spend 50% of our income on essentials, 30% on discretionary spending and 20% on savings — Brits are overspending by over £3,000 a year.

In this article, as the cost of  living continues to rise, we’ll explore the areas where Brits are spending the most — and the least — of their annual after-tax earnings.

Home Improvements and DIY

According to OLBG’s Discretionary Spend Index, the UK public are spending a combined 84% of their annual after-tax earnings on the top five most popular discretionary spend categories.

Topping this list for the most spend, and the highest increase from the year before, is Do it Yourself (DIY) and home renovations.

Brits are spending a whopping £3,304 a year on doing up their houses, which is nearly a quarter of our average annual earnings, and a likely result of spending more time at home during recurring lockdowns in the UK.

Compared to previous years, this a huge increase of 366%, with merely an average of £709 spent during 2019/2020.

Travelling Abroad

Holidays are another category making a dent in our bank balances this year. Although, there hasn’t been as dramatic of an increase from the year before.

In 2019/2020, the average UK adult spent £1,587 on holidays, whereas 2021/2022 saw Brits spend slightly higher at £1,596 a year, and equal to 12% of their annual average earnings (after-tax).

However, there’s a stark difference between these years when it comes to how far your pounds can go.

With a weak pound (at the time of writing) if you’re planning on heading abroad this year, then you’ll also get less for your money.

Gambling and Betting

Amongst the lower end of the scale of discretionary spend is gambling.

OLBG found we’re spending an average of £267 on gambling and sports betting, including lottery tickets, betting at racecourses, casinos and bookmakers. This figure also includes online betting at UK licensed betting and casino sites.

This spend equates to 1.9% of the annual average earnings, post-tax.

In comparison to the year before, this a slight increase of £4 per year.

To ensure you’re remaining safe, smart and responsible when it comes to gambling, OLBG have produced a Responsible Gambling Guide, which explains the features offered to punters from online bookmakers, to help stay safe when gambling online.

Mobile Phone Services

The amount we pay for our phones has seen one of the lowest rises in costs over the years. It seems Brits are fairly savvy with their spending when it comes to phone providers.

There’s only been a 14% rise in expenditure on mobile phones, including data services, since 2019. In 2021/2022, we spent on average, £240 a year on our phone services, which was slightly lower at £211 in previous years.

There are a vast range of categories where us Brits are spending our spare cash — with different areas seeing different levels of expenditure.

As the cost of living crisis continues in the UK, OLBG’s Index aims to update their figures every quarter, to discover the latest trends in consumer spending of disposable income.