Americans are Already Strapped for Cash Ahead of the Holidays

Credit card balances hit $1.17 trillion this fall, but that’s not stopping holiday shoppers from racking up more debt.

Back-to-school season can be expensive for families, but that doesn’t stop most shoppers from spending even more during the holidays.

According to the National Retail Federation, parents spent about $875, on average, to send K-12 students back to school. But come Black Friday, winter holiday spending is expected to reach a record $902 per person. In their annual Holiday Shopping Survey, Debt.com confirms that nearly 7 in 10 Americans said they will “go into debt for holiday shopping,” with a quarter of those shoppers taking on at least $900 of debt. That doesn’t bode well as we head into most households’ most expensive time of year.

So, what are families already strapped for cash supposed to do to avoid holiday debt this year?

Taking on additional debt by financing purchases creates a big burden, especially if you haven’t been saving throughout the year to cover holiday spending with cash. An overwhelming credit card balance in December could mean you’ll start 2025 with unwanted financial stress.

Thankfully, there is still time to plan ahead so you can minimize holiday debt.

Holiday Budgeting Tips (If You’re Already Strapped for Cash)

#1: Add up what you spent last year

Even though the average household spending for the winter holidays is expected to average around $900 this year, if you want a real measure of what you can expect to spend, you need your family’s total expenses from last year.

Go back through your credit card and checking account statements to see what you spent. This will help you identify ways to cut back.

Once you know what you spent for 2023, you can start making your 2024 holiday spending plan to get ahead of the game.

#2: See what you can cut back on this year

If you already know that you’re strapped for cash heading into the holidays, streamline your purchases to reduce expenses.

• If you went over budget decorating, avoid buying new decorations this year. Exercise your crafting muscles and make some decorations instead. You can also arrange decoration swaps with friends or family where you agree to trade items so everyone’s home can benefit from a fresh look while sticking to a budget.
• If gifts were the area where you overspent last year, make a list that will help you stay on budget this year. Talk it out with your family and agree to put a spending limit on everyone’s gifts. Limit by the number of gifts, dollar amount, or both. Once you set your list, take it with you everywhere you shop!
• If entertaining was your biggest financial drain, plan more effectively this year. Consider arranging big family meals as potluck events or ask guests to bring their favorite beverage to your holiday party. Buy items in bulk when it makes sense and share ingredients across recipes. Calculate portions accurately to avoid food waste.
• If you’re traveling, book your tickets now to find the cheapest flights and avoid holiday upcharges. Look into flying on discount airlines or traveling during non-peak times to cut the cost of your flight. Stay with relatives or friends when possible – and don’t forget to chip in for groceries.

#3: Count your paychecks and save accordingly

If you’re on a bi-weekly pay schedule, you have a couple of paychecks left before the holidays. Instead of putting all the financial pressure on the last one or two paychecks, spread those costs out.

Check the pay calendar at your office to see how many paychecks you have left before the end of the year. Then, figure out how much money you need to cover your new and improved holiday budget. You should save as much as possible over the next few weeks. That way, you can pay for holiday purchases with cash or debit instead of relying on credit cards.

When trying to save, consider cutting discretionary expenses first – those are your “wants” vs. your “needs.” Plenty of small expenses stack up without warning. Try these strategies for instant savings:

• Eat out less at restaurants
• Pack your work lunch instead of ordering takeout
• Limit app store, streaming, and in-game purchases
• Cut back on going out on the weekends
• Cancel any subscriptions you haven’t used this year
• Avoid impulse purchases – stick to your list

With the right plan in place, you can manage your holiday spending and avoid financial regrets in the new year. It’s never too late to take control, cut back, and save for the holidays.