The most wonderful time of the year can also be the most expensive, causing families to experience financial stress and even go into debt over gift giving.
This holiday season is coming at the end of what Matt Shulz, chief consumer finance analyst at LendingTree, calls an uncertain year.
“Uncertainty, high prices, high interest rates and kind of a wonky job market are having an impact,” Shulz said.
Of course, these factors don’t impact everyone equally. Shulz said we're experiencing a K-shaped economy.
“The K-shaped economy means that you have a pretty wide divide of people, some who are doing really, really well and thriving and spending like crazy, and then another set of people for whom things seem to be getting worse and who are really struggling.”
The hidden costs of the holidays
Presents are the most obvious holiday expense, but airfare, hotels, meals, rideshares — even gas and parking fees all add up.
Given the tight economy, some people with less disposable income to spend are making adjustments.
“They're not necessarily stopping traveling altogether, but they may be choosing to drive instead of fly or travel for a little shorter time,” he said.
Hosting the holidays can also bring its own costs and general stress. Shulz said having guests pitch in for a potluck-style meal, helping with cooking or picking up loved ones at the airport can all lighten the shared financial or logistical stress of the holidays.
Make a list and check it twice
Despite popular legend, Santa actually doesn’t relieve the financial burden on parents to provide presents. And while there is pressure to deliver your kid the very best, Shulz said you should be realistic about your finances.
“It's important for people to realize that their loved ones probably don't want them to go into debt over gift-giving,” he said.
A spending report from NerdWallet found that 31% of Americans still have credit card debt from holiday shopping in 2024.
Shulz said having honest conversations in your family about a budget can be a teachable moment.
“It can allow you to have a conversation about, 'well, tell me what you really want,'” he said. “We can focus on that.”
He also said that going into a store or even onto a website with a focused goal of what to find can stop you from impulse buying.
“The simple act of making a list before you go shopping is really impactful, because it changes the whole vibe of your shopping trip, from being browsing and looking for inspiration, to knowing exactly what you want — getting in and getting out,” Shulz said.
Getting creative in the face of consumerism
Annaliese Griffin literally wrote the guide on how to buy nothing in the holiday season. The journalist’s philosophy is to take back the holidays from retailers by thrifting or getting creative with holiday swaps.
“The holidays, especially for parents, can be so stressful and so jam-packed with obligations and obligations to spend money, Griffin said. “So it feels more meaningful, as well as more affordable, to me, to throughout the year make it a habit to stop in the thrift store.”
As Griffin’s kids have gotten older, she said they have some specific things they do want new, but that they have also learned to be thoughtful about their relationship to stuff and money.
Her 5th grade son is into video games right now, which she isn’t excited about funding, so he takes his weekly allowance and bikes down to the video game shop where he trades old games or saves up to get the new one he really wants.
“He's learned that this is the secret to being able to explore more things,” Griffin said.
If she does buy something new, it’s often small and consumable. Stockings are filled with candy, nail polish and soap. The goal, Griffin said, is to avoid bringing in plastic that is just going to be swept off the floor in a week.
And when she gets something new, she buys from a small business, like a local bookshop.
“That's a thing that I'm happy to purchase new, because I'm happy to support authors and booksellers and the whole creative industry, and it gives me joy to be in a bookshop,” she said.
Traditions don’t need to be elaborate or expensive to be meaningful. Kaleb Wyse, bestselling author and influencer, said that while we're bombarded with perfection all the time on social media, that isn’t what makes the holidays memorable.
“I think what's important to do is to find the small elements that do make you a little happy.”
