Financial strain is reshaping how Americans approach what is typically a season of joy and generosity. According to a new survey from BadCredit, nearly half of Americans feel stressed about their upcoming holiday shopping.
With inflation driving up prices and economic uncertainty looming, many consumers are rethinking their spending habits. Still, the pressure to balance budgets and find meaningful gifts creates anxiety across the country.
To afford gifts, 54% of consumers will rely on big sale days, like Black Friday and Cyber Monday. Some may wait until the last minute, hoping retailers will throw them a lifeline with bigger discounts. Others might rely on credit cards or “buy now, pay later” options to help cover costs.
The growing reliance on these options reflects the financial pressure many households face as they try to maintain holiday traditions.
Financial Burden of the Holidays
With family budgets already stretched thin due to higher prices of everyday items, it’s no surprise holiday spending is making consumers even more antsy. The average person plans to spend $1,638 this holiday season, an increase of 7% — or $1,530 — from 2023. But this doesn’t tell the entire story.
Close to 30% of people plan to spend less this year, while 26% plan to spend more. Income plays a role here — 34% of those earning over $65,000 plan to spend more, while just 21% of those earning under $65,000 will do the same.
Holiday Budgets Feel the Strain
To afford gifts this year, 85% of people are looking for ways to save money on expenses. Fifty-five percent of consumers plan to cut back on takeout, 38% plan to reduce clothes shopping, and 31% plan to cut back on trips and vacations. Still, this might not be enough. Sixty-six percent plan on buying fewer gifts, and 25% say they will give homemade gifts to save money.
Because consumers are sending mixed messages, retailers will have to navigate this season with caution. They need to increase prices enough to cover expenses and earn a profit, but they risk losing customers completely if prices rise too much. Of course, consumers may give in and resort to credit cards to help cover costs. A common occurrence in past holidays, around 35% of consumers took on holiday debt in 2022 and 34% in 2023.
Holiday Stress Levels Increasing
While holiday budgets are at the top of most people’s minds, this joyous time of year also has a dark side. According to a survey from Headspace, 62% of respondents report “very” or “somewhat” elevated stress levels around the holidays. There are a number of stressors at play, from attending parties to travel. Gifts are particularly stressful, with close to half (49%) stressed about affording gifts.
Stress can impact all areas of life, including emotional and physical. Research shows people die from heart attacks more in the last week of December than any other time. Schedule time for some popular stress busters — going for a walk, meditating, or even watching funny videos.
If the stress stems from gift-giving, remember the adage, “It’s the thought that counts.” Consumers should not feel pressured into spending an amount they simply cannot afford. Spending quality time with someone or making a gift will leave an even greater impact.
Tips on Thriving This Holiday Season
What are some constructive ways to afford the holiday season with less stress?
According to Jon Dulin, financial expert and founder of personal finance website Money Smart Guides, consumers take on a three-pronged approach. “First, I advise people to set up a holiday savings account and contribute money to this account throughout the year. This will help cover the costs of gifts, entertainment, and travel. Second, if money is tight and someone struggles to save in this account, I suggest they take on a side hustle. Look into gigs like tutoring, delivering food, or babysitting, that pay cash and pay quickly. Of course, the key here is you put all the money you earn into your savings account.”
The third strategy is to become a smarter shopper. Don’t fall for advertisers’ tricks. “It’s easy to see a sales sign promoting a discount like ‘buy one, get 50% off’, but this does you no good if you only need one”, says Dulin.
Additionally, he recommends consumers think outside the box. “A trick I use all the time is shopping online, even if the store is right down the road. The reason I shop online is because I use shopping portals like Rakuten to get cash back on my purchase. I also earn cash back from my credit card, and I apply coupon codes found online. The result is I rarely pay full price and I earn a decent amount in cash back rewards.”
Whatever approach you plan to take, the advice is clear: spend within your means to avoid debt that will make it harder to survive financially.
