Most Americans will add debt and stress to their gift lists this year.
The interesting studies
This time of year, pollsters love to ask Americans how much they’re spending on the holidays. A recent survey from the National Retail Federation projects that the average person will spend $902 on seasonal expenses like gifts, decorations, and food.
But how will shoppers cover the costs?
The unfortunate trend for this season points to a wave of shoppers financing their holiday purchases. According to another poll, they’ll be using credit cards, “buy now, pay later” plans, and even payday loans to check off their holiday lists.
The big results
Debt.com’s latest holiday research confirms that nearly 7 in 10 Americans will take on additional debt to buy what they need this year.
The annual Debt.com Holiday Shopping Survey reveals that 25% of holiday shoppers will take on at least $900 of debt – an amount nearly equal to what the NRF predicts each shopper will spend in total.
Most shoppers (65%) say they will “spend more money on gifts recommended by AI.” Debt.com also found that artificial intelligence gift-giving advice will influence 1 in 5 shoppers to spend between $700 and $900 more than they planned to in the first place.
Holiday overspending is not just bad for financial health – it also affects Americans’ mental health: Last year, the American Psychological Association found that 58% of U.S. adults cited “spending money they don’t have” as a leading cause of holiday stress. So why do shoppers do it anyway?
The effective solutions
One common reason for overspending is a self-imposed pressure to impress family, friends, and colleagues. This pressure can lead to broken budgets and financial woes.
Many Americans fear they are judged on the price tag of the gifts they give. Others feel they need to buy something for everyone they know. Keeping up with peers’ spending habits can also ruin holiday joy, especially for lower income households. The APA reported that in 2023, households earning less than $50K annually were “more likely to rate their stress levels as high” over higher-earning households.
These distorted holiday beliefs (fed by incessant holiday marketing) need to be debunked before they bring overwhelming debt into the new year.
What you can do
It’s not too late to avoid the stress and the debt of holiday spending. Here are three easy steps to boost your budgeting power this season…
- Embrace technology. No, this doesn’t mean buying more high-tech presents. Use digital tools like Consolidated Credit’s Holiday Spending Planner to get your spending plan customized and organized before you shop.
- Budget online. Sign up for a secure and easy-to-use online budgeting tool. These apps let you easily categorize your income and expenses at the click of a button, simplifying the act of balancing your budget.
- Study up. Check out Consolidated Credit’s Holiday Survival Guide for a look at dozens of ways to save big. You can explore creative gift ideas that won’t hurt your wallet, and even find inspiration for new (and inexpensive) holiday traditions.
