The holiday season is a time for giving thanks, reflecting on the past year, and spending quality time with loved ones. However, it can also be a time when people tend to overspend on holiday purchases, leading to financial stress in the new year.
According to a NerdWallet poll, 83% of Americans plan to buy gifts for friends and family this holiday season, with an average expected spending of $1,014 on Christmas or other holiday gifts in 2024. This is a significant increase from the previous year, as reported by a Gallup poll.
Many consumers are willing to dip into their emergency funds or prioritize gifts over essential household bills, such as utilities and debt payments. Additionally, a large percentage of shoppers rely on loans or credit cards to fund their holiday spending, with some still paying off credit card debt from the previous holiday season.
Psychologist and financial expert Brad Klontz explains that people have an innate impulse to overspend, as they are wired to prioritize immediate needs over long-term financial goals. This can lead to overspending during the holiday season, especially when faced with social pressure or enticing deals promoted by companies.
To avoid overspending during the holidays, experts recommend developing a spending plan and using tracking apps to monitor purchases. It’s essential to think beyond gifts and consider other seasonal expenses, such as groceries, holiday attire, and entertainment costs. Setting gift expectations with family and friends, utilizing rewards programs, and reflecting on long-term financial goals can also help curb overspending.
By being mindful of their spending habits and making conscious financial decisions, consumers can enjoy a meaningful holiday season without falling into the trap of overspending. It’s crucial to prioritize financial well-being and plan ahead to avoid unnecessary financial stress in the future.
