Alcohol - A Rising Cost

Wednesday 9 January, 2019 Money Advice

In light of Alcohol Awareness Week 2018 (19-25 November), it’s an apt time to consider the effect that the increasing reliance on alcohol has on household budgets and finances. According to the Royal College of Psychiatrists, about 1 in 3 men and 1 in 6 women develop some sort of health problem as a result of alcohol consumption, either directly or indirectly.

One of the most common misconceptions about the misuse of alcohol is that only acute alcoholism that affects an individual’s ability to function in society. While it is undeniable that severe alcoholism is an extremely debilitating illness, the increasingly prevalent problem of binge drinking can be every bit as troublesome in its own way.

Impulsive Buying

Furthermore, it isn’t only drinking binges that can be a problem in this context. Studies have shown that people who drink excessively are inclined to spend substantially more of their disposable income while under the influence of alcohol. This is an even greater problem in the internet era, as those under the influence have an immediate and accessible avenue for acting on their spending impulses.

The notion of shopping while intoxicated sounds frivolous, but it is a phenomenon that can be exploited by retailers. As Time website explains: “Many online sellers flood consumers with limited-time offers starting well after the dinner hour, when the odds are best that people have a few drinks in them.”

Impacting Performance

Excessive drinking can also affect an individual’s productivity and ability to perform in the workplace. It is well known that heavy drinking can have a negative effect on the immune system, making employees more likely to miss work through illness.

The NHS estimates that the UK economy loses approximately £7 billion in lost productivity each year because of alcohol. Employers and employees alike suffer from this problem as such periods of absence obviously place a further strain on household finances and business productivity.

Alcohol and Credit Cards

Studies have also shown a correlation between alcohol consumption and credit card debt, especially among young people. Given that alcohol is now 61% less expensive than it was in 1980, it is much more accessible to a wider range of people.

The link between alcohol and indebtedness is obviously more clearly demonstrated when social drinking turns into addiction. The need to finance a drinking habit is more problematic when individuals are out of work, and tempted to borrow money to feed their addiction.

For an addict, dependence on alcohol can become all-consuming and real priority debts like mortgages, utilities, council tax etc. can get neglected. It’s also not uncommon for excessive alcohol spending to appear on a debtor’s income and expenditure form. While no specific allowance is generally given in a debtor’s budget, it is common practice in the money advice industry for some concession to be allowed for a client’s social activities and hobbies, including alcohol spending.

It is certainly not the place of advisers to make moral judgements on the expenditure of debtors, but it’s clear that just as alcohol can cause money problems, controlling intake can also form a part of debt resolution. It’s often a difficult and frequently unpopular message, but reducing alcohol spending just a little can improve the health of clients in more ways than one (for more information on tips for improving your body and mind, including reducing alcohol consumption, you can read our blog).