The majority of Americans do not set out intending on spending more than the previous year’s holiday season – although that doesn’t mean that they won’t go into debt. A recent survey found that the average parent with children under 18 plan to spend a budget of around $300 on holiday gifts. Shoppers buying for a significant other spent an average of about $250 on their gifts. If we know how much we plan to spend, how does holiday debt affect most shoppers each year?
Knowing the typical amount we tend to spend and having a budget may trick many holiday consumers into the idea they aren’t overspending during the festive season. Many holiday shoppers do not plan on spending more than last year and 21% plan on spending less. However, even with keeping a watchful eye on your holiday spending 42% of Americans will land themselves in debt with over 60% of those becoming more likely for those who already have credit card debt.
Many U.S. consumers paid down their credit card balances during the pandemic; data from Experian estimated the average credit card debt to be upwards of -$5,250. These amounts can quickly climb higher and higher as more than half of active credit card accounts carry their balances from month to month with an average 16% interest rate.
Inflation partnered with an unhealthy economy due to the global pandemic could lead to people having less money to spare for gifts or lack enthusiasm for the holiday season. Alternatively, the heightened excitement for the season and the distraction of the pandemic may lead to the opposite effect with shoppers spending more.
Below are some tips for responsible holiday shopping to keep you out of debt this season:
- Don’t wait until the last minute to buy gifts as products may be more likely to sell out quickly. Prices aren’t likely to be reduced with the current shipping and export channels being delayed with the pandemic.
- Consider group gifts.
- Avoiding over-decorating, travel, and hosting holiday parties.
- Get creative in saving money this season by using gift cards, reward points, or homemade gifts.
- Lastly, avoid buying now and pay later specials unless you have truly thought out how that debt will fit into your budget.
The majority of people don’t even think about the real cost of holiday spending, but your pockets take a considerable hit each year that you don’t have a financial plan. Use these tips to maximize your dollar while holiday shopping and avoid the bah-humbug blues.