There have been some interesting surveys recently taking a look at spending this holiday season. In a survey done by creditcards.com, almost two-thirds (57%) who already have credit card debt from last year are planning to spend and increase that debt even more. Unfortunately, if these folks had been working down their debt from last year, this is going to put them a step backwards by adding to the debt. In the survey, they plan to spend on children ($276/child) and a partner ($251).
What They Say Isn’t What They Do
Curiously, in many cases people said that they were going to cut back on their spending this holiday season. They listed reasons such as the higher cost of things which will cause them to limit travel, entertainment and decorating. This includes higher-priced items that are being deferred.
While this desire makes sense, spending patterns tell a different story. Whether it is stimulus money that is still available, savings from commuting costs or other savings, the retail sales numbers indicate that people are still going to end up tempted to spend on holiday purchases. Last year surveys indicated that people were not going to spend as much, but the 2020 holiday season showed an increase of 8.3% over 2019 and the forecasts for 2021 are for around 7-9% increase as well.
Interestingly enough, spending patterns depended on age as well. In a regional survey by WSFS bank, young people aged 18-24 were planning to spend more (38%) this year on holiday gifts, even though all age groups together indicated that they were planning to spend less (40%). The young people were planning to spend more on celebrating at local restaurants or at-home gatherings. This increase in spending by the young people may be because they feel more financially secure than the overall population.
Keeping it Real With Spending
Okay, let’s say your one of the 50 million Americans that already have credit card debt and want to spend less so that you aren’t adding to your debt problem. Here are a few ways that people surveyed said that they would spend less or spend more economically:
- Seek out coupons and store sales
- Limit gift exchanges to immediate family members
- Give homemade gifts
- Re-gifting (yes, it is done)
- Buying used or secondhand items
- Give time in the form of a certificate they can redeem for your time in babysitting, or making a meal, etc.
- Skip gift-giving altogether
Although skipping gifts altogether may not sound realistic (especially when it comes to children), for adults that could mean volunteering your time at a charity in honor of someone. Or it could mean having that conversation about dropping the tradition of gifts. In my family household we reached a point where all of the children were out of the house and on our own. Since we didn’t know what the others wanted, we just agreed that getting together as family was gift enough and nothing more was needed.
Another method for reducing spending is to rethink about your gift ideas. Instead of just purchasing the same thing again this year (which is going to cost more due to inflation), consider alternatives. In the regional survey 28% said they planned to buy local in order to support local businesses, and the personal touch. Many small businesses are offering online shopping and delivery experiences as well.
Keep to the Budget
One of the best ways to keep from getting into more debt is to set a budget that your finances can support. That means looking at what you have available, or deciding how to pay off the spending ahead of time. Once you have a budget in mind, you can do things like loading money onto gift cards or pre-paid cards and just use them for your holiday shopping. Leave the credit cards at home and use these as your budget.
Be creative! See how much you can acquire for gifts with the fixed amount you have to spend! For those who like a bargain, this can be a fun challenge.