An uncertain economy has many Americans heading into the holiday season concerned about their budgets. In addition to high interest rates and inflation, as well as student loan repayments resuming in October, many borrowers are now paying loans they might not have touched since early 2020.
This is impacting how many Americans can afford discretionary spending like travel. Nearly one-third (31 percent) of Americans traveling for the holidays in 2023 are worried their trip will place a strain on their budget, according to Bankrate. Additionally, 25 percent anticipate feeling pressured to spend more than they’re comfortable and 16 percent are worried they might go into debt to pay for their holiday travel.
“If staying home during the holidays means saving money, it’s a financial decision you won’t regret, especially at a time when the economy feels so uncertain,” says Bankrate Senior Reporter Alex Gailey. “Any money you’re able to save up from not traveling can help you reach your emergency fund goal or allow you to pay off any high-interest debt faster.”
Lower- and middle-income holiday travelers are more likely to have financial concerns about their upcoming trips. Holiday travelers with a household income below $50,000 per year are the income group most likely to say they’ll feel pressured to spend more than they’re comfortable (30 percent), according to Bankrate, and to say they’re worried they may go into debt to pay for holiday travel (21 percent):
Note: Of U.S. adults who are traveling this holiday season; This was a select-all-that-apply survey question, with additional responses that not shown in this visualization.
Source: Bankrate survey, September 12-14, 2023
Additionally, a little more than one-third (34 percent) of holiday travelers with a household income under $50,000 a year and 35 percent of holiday travelers with a household income between $50,000 and $79,999 a year say the upcoming holidays will place a strain on their budgets.
High costs have families scrambling to afford the litany of expenses that crop up during the holiday season, including travel, gifts, décor and more. American consumers are expected to spend $1,530 this holiday season on gifts, travel and entertainment, according to PWC, 7 percent more than in 2023. Two in five (40 percent) of consumers are expected to spend more than they did last year.
“I’m in several moms’ groups and I can’t tell you how many posts (there are) right now with people saying, ‘I’m not going to be able to afford a lot for the holidays. What are you doing, what suggestions do you have,'” says Erin Voisin, a California-based certified financial planner and managing director of wealth management services at EP Wealth Advisors. “People are definitely experiencing it and (are) looking for resources and ideas to help in any way they can to make the holidays or summer breaks.”
Though inflation has eased somewhat, Voisin says her clients are seeing high prices and added costs from going to the office for the first time in years. Amid high interest rates, she also says people are trying to avoid adding too much credit card debt this holiday season, though people are definitely still using credit cards for their holiday spending.
“There’s a lot going on right now — you still have inflation that’s relatively high. Grocery bills (and) utilities just cost more now. Money for discretionary spending to go travel and do things around the holidays has taken a backseat,” Voisin says.
During the holiday season, you may see many social media posts of luxury tropical getaways and expensive gifts. People staying home for the holidays may feel insecure in comparison.
Secrest, a stay-at-home mom, runs a popular TikTok account where she posts down-to-earth parenting vlogs and household hacks. She’s all too aware that social media feeds can be filled with other moms showing off spotless houses and effortless parenting skills, especially during the holidays.
“I think a lot of the time people will overextend themselves to present on social media that they have the perfect life where their kids get these wonderful gifts, and they have the biggest Christmas tree and the brightest, whitest house,” Secrest says. “And I’m just reminding myself that social media is not real.”
One-fifth (20 percent) of social media users feel negatively about their own finances after seeing posts on social media, according to a September 2023 Bankrate survey, and 51 percent of users think social media promotes unrealistic lifestyles.
“Trying to ‘keep up with the Joneses’ is a common struggle for many Americans during the holidays, especially regarding travel,” says Gailey. “The good news is: You can avoid breaking the bank by embracing budget-friendly holiday traditions at home with family and friends. That could be cooking a special meal or doing a holiday movie marathon together.”
Secrest decided to stay at home with her kids due to the high cost of child care, and though she brings in some income from TikTok, this holiday season, she’s still on a tight budget as a largely single-income household. As a content creator herself, she knows those videos aren’t necessarily realistic, but sometimes, even she has to remind herself that.
“I think we get it in our head that you see a video of someone and you think that their life is this one way. I might show you my living room being cleaned, but that doesn’t mean that my whole house is perfectly organized,” she says. “You may see that these people on social media can afford all these things, but that doesn’t mean that their credit card debt isn’t super high.”
If you’re planning the holidays on a budget this year, but your kids are asking for expensive gifts or trips, it may be time to talk with them about holiday finances. It can be intimidating to talk about money with your kids, but giving them the tools to talk about money can help them understand your family’s financial decisions and teach them healthy financial habits for the future. Here are a few tips to keep in mind:
Every family is different, and not all families want to approach budget transparency the same way. But generally, talking to kids about money when they’re young can help them understand the idea that money is limited. Voisin’s children are nearly 4 years old and 6 years old, and she has explained to them that parents need to go to work to earn money. Some things might be too expensive, or just not in the budget that week.
“It’s OK to talk to your kids about this kind of thing. You don’t have to say, ‘We’re broke’ — it’s just that decisions have consequences,” she says. As an example, she might tell her kids, “If you’d rather have this nice gift, then maybe we can’t have a birthday party this year. So what would you rather do?”
It can be hard to explain why your kids can’t have expensive toys if they think Santa Claus is giving out the gifts. Secrest tells her kids that families give Santa a budget every year, which is why some kids may have nicer presents than others. She hopes that saying every family has a different financial situation will teach them not to compare themselves to others.
Giving experiences can be more affordable than toys and can help your child feel less left out during the holidays. Secrest buys gingerbread houses shortly before Christmas, when they’re on sale, and her family builds them on Christmas Eve.
Whether you’re throwing a family party from your living room or celebrating on the couch, you can still have a great holiday this winter without traveling. Thrifting, homemade gifts and long-term planning might not only be a better fit for you and your family, but can save you money. Secrest advocates for memberships to local organizations like a zoo or gardens as holiday gifts — she thinks her kids will come to appreciate it more than toys.
“While it isn’t as exciting to open on Christmas morning, it’s more exciting to go to the zoo 25 times during the year than it is to get a little toy,” she says.
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Methodology
Bankrate commissioned YouGov Plc to conduct the survey on holiday travel. All figures, unless otherwise stated, are from YouGov Plc. Total sample size was 2,419 US adults. Fieldwork was undertaken between 12th – 14th September 2023. The survey was carried out online. The figures have been weighted and are representative of all US adults (aged 18+). The survey was carried out online and meets rigorous quality standards. It employed a non-probability-based sample using both quotas upfront during collection and then a weighting scheme on the back end designed and proven to provide nationally representative results.
Bankrate commissioned YouGov Plc to conduct the survey on summer travel. All figures, unless otherwise stated, are from YouGov Plc. Total sample size was 2,461 U.S. adults, among whom 1,554 are likely to take at least one summer vacation this year. Fieldwork was undertaken on March 29-31, 2023. The survey was carried out online and meets rigorous quality standards. It employed a non-probability-based sample using both quotas upfront during collection and then a weighting scheme on the back end designed and proven to provide nationally representative results.
Bankrate commissioned YouGov Plc to conduct the survey on travel woes. All figures, unless otherwise stated, are from YouGov Plc. Total sample size was 3,689 U.S. adults. Fieldwork was undertaken June 6-9, 2023. The survey was carried out online and meets rigorous quality standards. It employed a non-probability-based sample using both quotas upfront during collection and then a weighting scheme on the back end designed and proven to provide nationally representative results.
Bankrate commissioned YouGov Plc to conduct the survey on social media. All figures, unless otherwise stated, are from YouGov Plc. Total sample size was 3,607 U.S. adults, of which 3,304 are members of at least one social media platform. Fieldwork was undertaken between 16th – 20th August 2023. The survey was carried out online. The figures have been weighted and are representative of all US adults (aged 18+). The survey was carried out online and meets rigorous quality standards. It employed a non-probability-based sample using both quotas upfront during collection and then a weighting scheme on the back end designed and proven to provide nationally representative results.
