Nearly Half of Americans Feel Financial Stress During the Holidays
The holiday season is here, and with it comes the temptation to overspend. However, there are practical steps you can take to stay in control of your finances.
Holiday shopping can be expensive. Between gifts, decorations, and festive meals, the average consumer is expected to spend $902 this year, according to the National Retail Federation. While the holidays bring joy, they can also cause financial strain, leading some families to spend beyond their means.
A CreditKarma report shows that nearly 50% of Americans feel most stressed about money during the holidays. In fact, about a third of consumers are heading into this shopping season with over $5,000 in debt. Meanwhile, a NerdWallet survey revealed that almost 30% of credit card users are still paying off last year’s holiday expenses.
“It’s important to remember that the holidays will end, but financial responsibilities will continue,” says Elizabeth Ayoola, a personal finance expert at NerdWallet. With that in mind, here are five ways to keep your spending under control this season.
1. Set a Budget and Manage Expectations
Start by creating a holiday budget. Divide your spending into categories such as gifts, travel, meals, and decorations. Set a limit for each and track your expenses closely. According to NerdWallet, only 27% of holiday shoppers set strict budgets for their spending on gifts.
Looking back at last year’s expenses can help you estimate your budget. Be honest with yourself and your family about what you can afford. Open communication can reduce pressure and set realistic expectations.
For help, check out budgeting tools like the Consumer Financial Protection Bureau’s free expense tracker or NerdWallet’s budget worksheet.
2. Watch Out for “Spaving”
“Spaving” – spending more to save more – is a common trap during the holidays. Deals like free shipping for larger orders can tempt you to spend more than you planned. CreditKarma found that 40% of Americans are more likely to spave during holiday shopping, and 37% admitted to buying items for themselves while shopping for others.
To avoid overspending, stick to a specific list and shop with intention. Consider linking directly to items you want to avoid browsing for extras. Courtney Alev, a financial advocate at CreditKarma, suggests that this simple step can help keep your spending on track.
3. Pay with Cash When Possible
While 74% of shoppers plan to use credit cards for their purchases, studies show that paying with cash can help you spend less. This is because physically handing over cash triggers a stronger emotional response, known as the “pain of paying,” which can curb unnecessary spending.
Using credit cards may also result in hefty interest charges, especially with some store cards carrying rates as high as 35%. Consider using cash to avoid these costs.
4. Limit Social Media and Promotional Emails
Social media often fuels overspending. Nearly 27% of consumers in CreditKarma’s survey said social media ads influenced them to spend more during the holidays. The impact is even stronger among Gen Z (46%) and millennials (37%).
If you’re tempted by targeted ads or feel pressured to keep up with others, consider logging off platforms like Instagram or TikTok until the season ends. You can also unsubscribe from promotional emails to reduce temptation.
If logging off isn’t an option, adjust your account settings to see fewer personalized ads. A less targeted feed can help you stay within budget.
5. Create Small Obstacles to Spending
Make spending less convenient to help avoid impulse purchases. For instance, remove saved credit card details from your online accounts so you have to manually enter them. This extra step can give you more time to consider your purchase.
Some people even block websites where they tend to overspend. “Adding friction to your shopping process can help you stick to your goals,” Ayoola suggests.
As you prepare for the holidays, it’s also helpful to set financial goals for the new year. Thinking ahead can keep your spending in check and help you enter January on solid financial footing. “When you focus on your goals, it’s easier to rein in holiday expenses,” Ayoola says.
