Even before we taste our Thanksgiving turkey, some of us have visions of sugar plums dancing in our heads. However, many consumers are revisited by the ghost of last season’s spending spree. A holiday budget can help with that.
More than 28 percent of credit card users are still paying off debts from last year buying gifts, according to NerdWallet. The good thing is that this year’s number is better than last year’s. By 2023, 31 percent of cardholders did not pay off the previous year’s holiday debt.
Cost Increases
All that comes as consumers are expected to increase holiday spending by 2.5 to 3.5 percent this year, according to the National Retail Federation (NRF). That would be $979.5 to $989 billion from November to December. Last year we made $955.6 billion.
“The economy remains healthy and continues to strengthen as we enter the final months of the year,” said Matthew Shay, president and CEO of NRF. “The winter holidays are an important tradition for American families, and their spending power will continue to be supported by a strong job market and wage growth.”
Wage Growth to Support Spending
Shay’s comments about the salary increase were echoed by this – Paul Siegfried, senior vice president and credit card business leader at TransUnion.
“On the consumer front, inflation in the latter stages, combined with continued wage gains for consumers, is likely driving consumers to financial equality where they estimate their monthly expenses and their monthly budget,” said Siegfried.
From September 2023 to September 2024, wages increased by 3.8 percentaccording to the Bureau of Labor Statistics. Adjusted for inflation, the figure is 1.2 percent.
Reducing Credit Card Debt
Credit card balances were 6.9 percent higher at the end of the third quarter this year compared to 2023. However, that’s down from the 15 percent increase seen last year, TransUnion reported.
“The modest increase in balances is probably the result of a combination of factors. For example, if we look at credit cards, lenders in many cases have tightened underwriting standards that may result in lending to borrowers less likely to grow quickly,” said Michele Raneri, vice president of US research and consulting at TransUnion.
On the 26th day of Christmas. . .
Another factor that may affect holiday spending is that there will be five fewer shopping days between Thanksgiving and Christmas this year compared to last year. There will be only 26 shopping days this year, according to the NRF.
Most of that shopping will be done online. Non-retail sales are expected to grow from $272.3 billion last year to between $295.1 and $297.9 billion by 2024. That’s an 8 to 9 percent increase, the NRF reports.
Adobe predicts that 2024 holiday spending “Of course expected to be the best ever, with a record $128.1 billion spent on mobile devices with a 53.2% share over desktop, while promoting the use of Buy Now, Pay Later services.”
Discounts will drive more consumer spending, according to Adobe. Those discounts are expected to reach about 30 attendees.
“We remain optimistic about the pace of economic activity and growth expected in the second half of the year,” said Jack Kleinhenz, NRF’s chief economist. “Domestic finances are in good shape and encourage strong spending over the holiday season, although households will spend more cautiously.”
Avoiding Holiday Debt
No one wants to put the Bah Humbug on vacation use. However, if you spread the holiday cheer wisely, you won’t wake up with regrets in the new year.
Sleepopolis got that 81 percent of participants in its 2024 holiday stress survey feel more stressed during the holidays than at other times. In addition, one in four respondents said they felt more pressure this year compared to last year.
“Despite money being the number one factor in stress year after year, it may be surprising to see people not using a budget to help alleviate some stress,” reports Sleepopolis. “About 23 percent of people are spending more than a year ago, and only 35 percent are spending money for the holidays.”
Set a Holiday Budget
The foundation of managing holiday spending is setting a holiday budget.
“One of the most important pieces of holiday shopping advice is to take the time early in the year to set a reasonable budget,” advises PNC Bank. “Think of how much money you can comfortably spend without creating financial hardship.”
Like Santa, you might have to check your gift-giving list twice — maybe more. Once your overall budget is set, PNC recommends giving each person on your gift list a spending limit. You may need to reduce those individual caps to fit your budget.
“This may take a few rounds to make the numbers work, but focus your attention on thoughtful gift giving,” PNC noted.
Know Before You Go
Planning your shopping route can save you money and stress. Bank of America recommends shopping early and using technology to get the best deals.
“If you get an offer that’s over your budget,” advises BA, “use your phone to see if you can get a better price elsewhere. Most stores have price matching policies if you get a better deal.”
Creative Gifts
Many of us forget the old saying “it’s the thought that counts” when shopping for holiday gifts. However, keeping that in mind can help you stay within your vacation budget. It may also lead to a better, more meaningful gift.
You may benefit from the power in numbers when thinking about a big ticket item for a parent or grandparent. Pooling money with relatives can get that expensive item without anyone going over budget.
Then there is the DIY gift. You can use a talent, such as painting, cooking, woodworking, knitting etc. to complete your list of gifts. Your personal effort may mean more than any gift you might buy.
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