Nearly Half of Middle-Class Families Can’t Afford All the Holiday Gifts They Want to Give This Year

Young woman holding stack of gift boxes over blue studio background.
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While the pandemic, supply chain issues and inflation have disproportionately affected Americans living below the poverty line, the middle-class will face struggles this holiday season, as well.

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A recent survey conducted by online financial services website One revealed that 46% of middle-class families polled will carry a balance on their credit cards to be able to afford the gifts they want to give. The majority of respondents reported earning between $50,000 and $99,999 annually, while just over 17% earned between $100,000 and $124,999.

The survey also found that 58.95% have not actively saved for the holiday season this year, and 52.56% do not have a predetermined budget for their holiday spending. Even so, the majority (57%) estimate they will spend between $101 and $750 on holiday gifts, with almost 24% saying they expect to spend between $251 and $500. Nearly one-third (32.79%) said they intend to spend less this year than last year, but 47.25% reported no change in their spending plans.

If you haven’t written a budget or started your holiday shopping yet, it’s not too late. There are still ways to keep your spending under control, minimize your holiday stress and get your loved ones the gifts they really want this year.

Create Your Budget Now

Whether you intend to use your credit cards or stick to debit cards and cash this holiday season, creating a budget can help you avoid overspending.

“The holidays are a time to be generous, and we all love finding the perfect gifts for family and friends. But if you’re not careful, going overboard could end up derailing your long-term financial goals,” says Tony Molina, CPA and product evangelist at financial services site Wealthfront. “The first thing you should do to stick to your budget is to make a list of who you’re buying gifts for and how much you’re willing to spend on each person. Writing down this list can help you visualize your finances and see where you can afford to spend money.”

Make Your Money Work for You

Brian Hamilton, CEO of One, suggests “spending mindfully” and taking advantage of financial products like the One card to budget effectively for the holidays. The One card enables you to separate your deposits into individual “pockets” of money that can be used for specific expenses, such as bills, rent or mortgage, food, travel or holiday gifts.

“When you’re are deliberately creating buckets of money for a specific purpose, you can keep it mentally segmented so you’re not overspending,” Hamilton says.

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Strive to Spend Less

Molina recommends turning to cash-back apps or plug-ins like Rakuten and Honey to earn money back on your purchases. You can also use apps like BrickSeek to find items in stock — and on sale — which can reduce your spending and your stress levels this holiday season.

“Try using a cash-back portal like Rakuten, or use a plug-in like Honey to make sure you never miss out on a discount code,” Molina says.

Only 11.96% of people polled by One reported using tools or apps during holiday shopping, so this could be an underutilized step to save money.

However, be cautious about leveraging credit card rewards, as it could lead to overspending, Hamilton warns. “Credit cards are spending vehicles,” he says. “They are optimized around getting you to spend more. There are certainly rewards cards that optimize for categories like gas or groceries, but the actual impact of those rewards is not life-changing money. It ends up being a few bucks.”

He continues, “If you overspend by 10% on gifts, that overshadows the extra 1% you got in cashback by putting groceries on your credit card. Deliberate organization of money into pockets for specific expenses and effective budgeting overshadows the incremental benefits you get from using a rewards credit card.”

Make Your Money Work for You

Manage Credit Wisely

If you do have to use a credit card to afford the gifts your family and friends want most this year, seek ways to minimize the interest you’ll owe over time. The One survey revealed that nearly 46% of middle-class Americans will carry a balance on their credit cards from holiday shopping. Of those who expect to carry debt, 15% said it will take them a month to pay off their balances, while 17.74% said it will take between two and four months. Another 7.62% expect to pay off their balances by the middle of 2022, and 4.44% said it could take 7 months or more.

If this sounds like you, Hamilton urges you to consider your credit options. “Don’t carry a balance on a higher interest credit card,” he suggests, urging shoppers to look at lower-cost lines of credit.

For some Americans, taking out a home equity loan or home equity line of credit while housing interest rates are still low could be a good alternative. But there are other products that can offer interest rates lower than the average for sub-prime credit cards, which is 20.5% or even the overall average, which is 15.6%, according to

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Pointing out that a One account includes a credit line with a 12% interest rate, Hamilton suggests this could be a good alternative for many consumers. He recommends using the lower interest credit line to pay off a higher interest card.

Make Your Money Work for You

“If you don’t have a cheaper card right now, open a product that comes with an incorporated credit line at a lower rate or apply for a lower interest card if you can,” Hamilton says. “Just letting the balance sit on whatever card you used for spending is just easier for some people. But the reality is, in most cases, you don’t have to.”

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