Holiday gift spending drops to $880 as families trim budgets

Consumers plan to spend an average of $880 on holiday gifts this year, a 21% reduction from the $1,100 projected for the previous season. The drop reflects a widespread effort to manage household finances amid rising costs for everyday goods. NerdWallet released the findings in its latest holiday spending report.

The financial pressure began building earlier in the year as inflation pushed up prices across multiple consumer categories. Shoppers are now adjusting their behavior to accommodate higher costs for food, utilities, and other essentials. This shift has led to a broader reduction in discretionary spending, not just on gifts.

Kim Palmer, a personal finance expert at NerdWallet, explained that the decrease is a direct response to financial stress. She noted that people are forced to calculate how to celebrate the season while cutting back on other expenses, such as travel. Many are staying closer to home to save money, which further lowers the total amount available for shopping.

Palmer recommends creating a shopping list early and spreading purchases over several months to avoid a December spending spike. She advises tracking items and waiting for price drops that often occur as the holidays approach. Shoppers should also avoid using emergency savings to cover gift costs.

The report highlights a growing reliance on buy now, pay later services to smooth out cash flow. Palmer warned that this method creates debt that must be repaid, potentially straining budgets in January. She urges consumers to stick to their lists and resist impulse purchases to maintain financial stability after the holiday season ends.