The festive season is typically a period of gratitude, contemplation, and quality time with loved ones. However, it can also be a time of excessive spending on holiday shopping if not cautious. Based on a survey by NerdWallet, about 83% of Americans plan to purchase gifts for their friends and family.
The average spending for holiday gifts is projected to be around $1,014 in 2024, significantly higher than the $923 recorded the previous year, as per a Gallup poll. Surprisingly, around 10% of shoppers intend to use their emergency savings for gift buying, while 9% would prioritize gift expenses over utility bills and debt payments.
Furthermore, about half of the shoppers plan to finance their holiday purchases using loans or credit cards. Interestingly, 28% of individuals are still clearing their credit card debts from the previous holiday season.
According to financial and behavioral experts, there is an inherent tendency in people to overspend, primarily due to immediate gratification from gifting loved ones. The longer-term financial goals often take a back seat during this period, leading to excessive spending.
The societal pressure to spend generously also contributes to this trend. The irresistible deals and discounts on Black Friday and Cyber Monday often trigger a shopping spree.
To avoid overspending during the holidays, experts suggest the following:
1. Creating a holiday budget is crucial. It can be done using a gift list tracking app to monitor purchases and actual spending.
2. Considering other potential seasonal expenses such as groceries for holiday meals, festive attire, greeting cards and postage, seasonal outings, dinners with friends, school fundraising events, and donation drives.
3. Setting gift expectations with family and friends in advance. This can involve focusing on children only, setting up a “Secret Santa” exchange, opting for shared activities instead of physical gifts, or setting a gift budget.
4. Utilizing free rewards to balance gift costs. This can include signing up for free retail loyalty programs, shopping through cash-back portals, and using browser extensions to earn rewards or free gift cards.
5. Reflecting on long-term goals that truly matter can help control the impulse for short-term purchases.
In conclusion, the holiday season is a time of joy and giving, but it’s essential to be mindful of the financial implications. By planning ahead, setting expectations, and utilizing rewards, one can enjoy the festive season without the stress of overspending.
