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Sunday, April 21, 2024

Financing the festivities: America’s holiday spending and saving habits

11.20.2023

With the holiday season in full swing, the time of giving is also the time for spending. For many consumers, being festive can come at a price, and opinions can vary on what’s the right balance to strike.

Empower surveyed 1,003 Americans to get a better look into what this season has in store for their plans to both spend and save money. Let’s see what they think it takes to get in the holiday spirit and how your shopping strategies compare.

Key takeaways

  • 74% of Americans say inflation is influencing their holiday spending.
  • 51% of Americans are not planning to travel this holiday season.
  • 37% of Americans plan to spend less than $250 on gifts this year.
  • 25% of Americans plan to use artificial-intelligence tools to help them buy gifts.
  • Over 1 in 10 Americans are budgeting over $1,000 for gifts this year.

Choosing a holiday trip (or skip)

As airports and car rental companies get ready for winter visitors, consumers prep their families and wallets for the many expenses needed to travel at the holidays. Deciding whether to make a trip can be the most expensive (and stressful) part of the season’s spending equation.

 

Nearly half of Americans said they plan to travel this holiday season (49%). Among them, 29% shared that they’ll increase from last year, while 11% will be able to cut back compared to what they spent last year. The majority, however, said their budget will be roughly the same (60%). Some (19%) are even prioritizing travel spending over gift-giving this season.

For the majority of Americans choosing to skip holiday travel this time around, many factors are in play when making that decision. Saving money is the primary motivator (46%), while flight prices and the overall stress of making a trip (both 32%) are big reasons to remain at their home base.

Cheering the season with celebrations and gifts

Regardless of where you stake a claim this year, gift-giving and other traditions remain mainstays of the holidays, though Americans are looking to show their holiday spirit without spending as much.

 

Over a third of respondents (34%) are trimming their holiday budgets in favor of saving money this year. Half are cutting back on buying gifts for friends (50%), new festive attire (48%) and holiday decorations (46%). They’ll also be seeking entertainment with events close to home. Most (56%) will take in holiday light displays, while close to half (47%) plan to enjoy cozy home movie nights. Despite a change in spending habits, the festive spirit will remain strong.

And gifts aren’t going away: Many Americans (63%) told us they plan to buy gifts for every family member, regardless of age. However, 13% said they’ll focus their gift buying mainly on the children in their lives.

As for picking out what to put in their carts, 55% of shoppers were inclined to buy them one significant or “big gift” item, while 45% preferred to give an array of smaller presents. Budget-wise, 37% have allocated less than $250 in total for gifts, whereas a small 11% set aside more than $1,000. And they’re aiming to shop smarter this year, too; shoppers say they’ll use artificial-intelligence tools (25%) to brainstorm gift ideas and get the best mix.

They’re likely to stay online to make those purchases as well, with 86% of those surveyed saying online retailers would be their top shopping destination. The majority of respondents (57%) will also take advantage of online deals by making purchases on Black Friday and Cyber Monday.

Making the holidays happen

Even if you’re a great bargain hunter and strategic shopper, it can be hard to be merry and bright if you’re worried about your savings, too.

 

The survey found that 61% of Americans have been feeling financially stressed this holiday season. Some 74% said inflation was a major factor affecting their holiday spending, and 62% are worried about rising food and grocery costs.

Gen Z faced a particular mix of challenges: 35% expressed concern over their job stability influencing their holiday spending, and 26% noted the strain of student loans on their budget.

Amid these pressures, Americans showed they can adapt. Almost 40% cut back on non-essential expenses like dining out, while 32% saved a portion of their income specifically for holiday festivities.

As the year winds down, many are thinking ahead and gearing up to make new plans. For their New Year’s resolutions, 54% of Americans said they aim to save more money each month, and 37% plan to tackle their debts. Another 34% shared an intention to reduce unnecessary spending. Budgeting was also top of mind, with 20% wanting to establish or stick to a budget next year and 19% highlighting their goal to build an emergency fund.

The holidays are a time for reflection and celebration, and this survey shows that Americans plan to do both. Even with challenges stretching their finances, they’re ready to show their holiday spirit.

 

This year, 30% of Americans have chosen to open their own homes for holiday celebrations. But for the majority — 70% — the festivities will be elsewhere, with nearly a quarter of that group saying it’s for financial reasons.

For expensive celebrations like Thanksgiving, budgeting can be especially important. And this year, many Americans (68%) said they would spend below $200 for the occasion, whether they’re hosting or not. The recent (and surprising) drop in turkey prices will ease that expense. But among this year’s Thanksgiving hosts, over half (54%) said they would be willing to spend $200 or more for a memorable feast.

 

Balancing holiday joy with economic reality

The holidays come with financial considerations, and this year, many will be especially mindful of their spending choices during these last months of 2023. As the winter chill sets in, we hope our findings offer tips for embracing the spirit of giving with financial prudence. In the words of Benjamin Franklin, “Beware of little expenses; a small leak will sink a great ship.”

 

Methodology

Empower surveyed 1,003 Americans about their holiday spending habits; 20% were baby boomers, 26% were Gen X, 26% were millennials, and 28% were Gen Z.

About Empower

Empower is a financial services company on a mission to empower financial freedom for all. We offer investment, wealth management, and retirement solutions for individuals and all sizes of organizations. Connect with us on Empower.com.

Fair use statement

If your audience is keen on understanding the dynamics of holiday spending and hosting patterns, feel free to share the insights from this study. We kindly request that your purpose be non-commercial and that you provide a link back to this page so readers can access our complete findings and research methodology.

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The Currency editors

Staff contributors

The CurrencyTM, a publication from Empower, covers the latest financial news and views shaping how we live, work, and play. We keep you current on ways to plan, save, and invest for life.

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