Here’s How Much Americans Plan To Spend on Gifts This Holiday Season — Is It Too Much?
Written by
Rebecca Neubauer
Edited by
Jenna Klaverweiden
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As the holiday season approaches, many Americans are gearing up for their annual gift-buying spree. According to a recent survey by Insurify, the average American plans to spend around $528 on holiday gifts this year. While this figure might seem reasonable to some, it represents approximately 12% of the nation’s median monthly income of $4,572.
This raises an important question: Is this level of holiday spending too much for the average American household?
Stretching Budgets to Their Limits
Many shoppers are feeling the pinch when it comes to shopping. According to a Deloitte survey, consumers are showing value-seeking behaviors this holiday season and 75% plan on taking advantage of a sale or promotion in the coming months.
Nevertheless, the Insurify survey reveals a concerning trend. A significant number of Americans are planning to stretch their budgets, or even exceed them, to cover holiday expenses. Specifically, 61% of respondents indicated they would spend exactly what they can afford, while 14% admitted they expect to spend more than they can comfortably manage.
This suggests that even with the best intentions to stay within budget, many shoppers struggle to keep their holiday spending in check.
The Impact on Families
Interestingly, those who expect to overspend are 44% more likely to buy gifts for their children compared with those who plan to stay within their financial limits. This indicates that parents may feel a heightened pressure to make the holidays special for their kids, even if it means financial strain.
The emotional aspect of holiday shopping cannot be understated, as parents often prioritize their children’s happiness over their own financial well-being.
The Role of Buy Now, Pay Later Services
To manage their holiday expenses, nearly one-fifth (19%) of shoppers plan to use buy now, pay later (BNPL) services. These services offer an attractive option for those looking to spread out their payments over time, often with interest-free loans. BNPL services are growing in popularly, with the industry expected to grow by nearly $450 billion from 2021 to 2026, per Statista.
However, the convenience of BNPL comes with its own set of risks. Shoppers who anticipate spending beyond their means are 2.3 times more likely to use BNPL services compared with those who plan to stay within their budget.
While BNPL services can provide temporary financial relief, they are not without pitfalls. Missing a payment can result in late fees and can negatively impact your credit score. According to a report by the Consumer Financial Protection Bureau, targeted advertising by BNPL companies encourages and contributes to financial overextension, making it easier for consumers to fall into a cycle of debt.
Is It Too Much?
While spending $528 on holiday gifts might be manageable for some, it is important to consider your specific financial situation when setting a holiday budget. Making a plan of who you are buying for and what items you will purchase can help you plan ahead and shop for sales, like Black Friday. Plus, you can avoid impulse purchases.
When doing your shopping, consider using cash and shopping in person to help you stay within budget. While online and nonstore sales are expected to increase this holiday season, per the National Retail Federation, you may want to avoid the trend and go to stores, as you may be more likely to overspend online or when using a BNPL service.
While budgeting for holiday gift-giving may feel Scrooge-y, the true spirit of the holidays lies in the joy of giving, not in the price tag of the gifts.
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