A late October survey from U.S. News & World Report showed that more than seven in 10 respondents who live paycheck to paycheck are worried about the holiday expenses this year. The survey revealed that a majority – 52.5% of respondents – say they’re living paycheck to paycheck.
How Much Are Americans Spending on the Holidays This Year?
Almost 33% of respondents plan to spend $500 or less on shopping this year. In last year’s U.S. News holiday spending survey, nearly 41% planned to keep costs under $500. The rate of inflation has eased, but prices are still high, suggesting that it might be more difficult to spend less this year.
- $500 or less: 32.6%.
- $501 to $600: 18.2%.
- $601 to $700: 9.5%.
- $701 to $800: 8.2%.
- $801 to $900: 4.6%.
- $901 to $999: 11.7%.
- $1,000 or more: 15.3%.
Holiday Spending Strategies
Respondents were given a list of payment strategies and asked to select all the options they plan to use. Here are the findings:
- Saved money and can afford it: 52.5%.
- Cut back significantly on holiday expenses: 21.4%.
- Cut back in other areas to cover holiday expenses: 30.5%.
- Put expenses on a credit card and carry a balance: 19.7%.
- Use buy now, pay later plan to delay cost: 13.1%.
- Open credit card with a 0% purchase APR: 4.6%.
- Borrow money another way: 2.8%.
While it’s terrific that a slim majority have saved money for the holidays, it’s troubling that so many plan to use credit to get through the holidays. Nearly 20% plan to carry a balance on a credit card and just over 13% will use buy now, pay later financing.
3 Ways to Survive Holiday Expenses
The problem with using credit as a holiday survival strategy, especially credit cards, is that it can lead to insurmountable debt. For those living paycheck to paycheck, increasing your debt load can lead to financial disaster.
This approach creates more debt that has to be paid off in 2024. A better way to go? Choose strategies to survive this year’s holiday expenses while adding minimal, if any, debt.
Make a Holiday Budget You Can Live With
This strategy is going to take a bit of acceptance on your part. Actually, on your family’s part, too. Even though you can’t have an extravagant holiday party or jet off to Fiji, that doesn’t mean you can’t still have fun and experience joy.
This is the year to create “experience gifts” rather than dropping tons of money on gift cards. Tap into a creative skill, such as making banana bread, knitting mittens or hosting a potluck dinner for the extended family. Another option is to buy a friend lunch and give an hour of your time. If things are really tight, you can even plan these lunches for January and February of next year to spread out costs.
A good way to stick to your list? Use Santa’s Bag, a gift-tracking app. With this app, you can track your list, see what you’ve bought, and stay on budget.
Use Credit Cards the Smart Way
Respondents were asked to identify all the ways they planned to save money by using credit card rewards. Here are the findings:
- Using cash back rewards on gifts or travel: 35.4%.
- Using airline miles for holiday travel: 15.2%.
- Using hotel points for holiday travel: 15.0%.
- Redeeming rewards points for gifts or travel: 32.2%.
- Not redeeming rewards: 24.2%.
- Don’t have a rewards credit card: 9.5%.
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