Research by Creditful reveals one in three Americans plans to spend more on gifts this year than last year for the holidays.
On average, the respondents plan to spend $1,193 this holiday season across the board. This includes gifts, travel, food and drinks, and decorations. Not surprisingly topping the list are gifts with the average shopper planning to spend around $536. On average people have nine people on their Christmas shopping lists, spending around $61 per person. Holiday travel comes second with travel expenses expected to be around $350. Expenses on food or drinks are also expected to reach $194 while decorations will go around $113.
Holiday Spending 2019 Forecast: Who will be splurging the most?
This holiday season parents plan to spend $230 more on gifts than non-parents. Among those who were surveyed GenXers will be buying the most gifts for children and grandchildren. Those between 40 and 54 years of age will also be paying for travel to visit their extended families. The damage from the holiday gift shopping comes to an average of $622 while travel expenses will average $437.
Baby boomers aged between 55-75 years follow close by with gift shopping averaging at $573. They will rack around $350 in travel expenses and $194 in either food or drinks. Millennials will relatively fork the least with them spending $491 on gifts and $314 for travel.
Some of this stress is probably due to financing their purchases. Close to two thirds (60.4%) used money from an emergency fund for last year’s holiday spending and also went into credit card debt. They averaged around $745 in credit card debt from the previous holiday season. And 16.9% of them are still paying off last year’s debt. A further 10.1% had to sell belongings for cash for their holiday spending.
Avoiding the Post-Holiday Doldrums
Holiday spending can take a toll on your finances well into the new year, but there are ways to plan and shop smartly. More than half of the respondents agree on the need to create a special budget for the holiday season. By making it as part of your monthly budget, you can prepare yourself by the time the holidays roll around. Allocating the budget also means you are less likely to overspend and get into holiday debt.
A holiday budget can help ward off the post-holiday woes by keeping you in budget. You can help stretch your purchases by shopping for gifts on big sale days, like Black Friday or Cyber Monday. Early planning of what gifts to buy also helps avoid late panic buying and leaves room to weigh in on your decisions.
Nearly a third of respondents plan to use only cash or debit for holiday expenditures this year. This will help them avoid accruing credit card debt that would have to be repaid with interest. However, 18% of respondents still plan to use credit reward dollars, points, or miles. Because holiday shopping isn’t always a line item in a budget. As a last-minute purchase could end up on your credit card.
If you do have to use your credit card for your holiday shopping use it with care. As mentioned earlier, people are still paying off last year’s debt. And 41% of those who plan to use their credit card this year are the very same ones that are in debt.
You might also consider shopping in brick-and-mortar stores than shopping online. The research shows those who did most of their shopping online were more likely to go into credit card debt during the holidays. This is in part, due to the convenience and ease of online shopping and the strategic methods retailers use to upsell products online.
The key, as the report points out, is to plan properly and budgeting with strategic spending.
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