Holiday gift budgets drop 21% as families cut back, report finds

(InvestigateTV) — The average person plans to spend about $880 on holiday gifts this year, a 21% decrease from last year, when people expected to spend just over $1,100, according to NerdWallet’s latest holiday spending report.

Kim Palmer, a personal finance expert with NerdWallet, said inflation and higher prices across the board are forcing many people to pull back on holiday spending. That includes cutting back on travel and staying closer to home, not just spending less on gifts.

Palmer said the report points to one underlying cause.

“The really big underlying story is that people are stressed out financially because prices have been rising across so many consumer categories, and so people are really forced to think, OK, how can I cut back while still celebrating the season,” Palmer said. “And so, people are doing that by spending less overall.”

Palmer recommends making a shopping list early and spreading purchases over several months instead of buying everything in December. She also cautions shoppers to be careful about how they pay for gifts.

“We found that people are turning to buy now, pay later, where you can spread out payments over several months,” Palmer said. “Of course, it’s a little bit risky because it’s a form of debt and you have to pay it back eventually, so that can be difficult once January hits.”

Palmer also recommends tracking the items on a gift list and waiting to buy when they go on sale, since prices often dip as the holidays get closer.

If possible, shoppers should avoid using emergency savings for holiday shopping, stick to the list and resist the urge to impulse buy, she said.