3 In 5 Americans Planning To Budget For The Holidays This Year

• Nearly half of Americans budgeting for the holidays are planning to reduce their holiday spending.
• Gen X plans to spend the most money this holiday season.
• Gen Z was the generation most likely to do holiday shopping in-person.
• Those celebrating with family this year plan to spend 53% more than those not celebrating with family.
• Almost half of all Americans plan to make budgeting a part of their New Year’s resolutions.
  

Holiday parties, gifts for loved ones and even home decorations all have one key thing in common: they cost money. The winter holiday season only comes around once a year, so it’s understandable to want to make the most of it. But for many, celebrating the most wonderful time of the year is expensive. In fact, approximately 157 million Americans (60%) plan to create a budget or set aside money this year specifically for the holidays.

With the 2023 holiday shopping season approaching fast, Rocket Money^SM surveyed 2,000 U.S. adults celebrating the holidays this year to find out what has or hasn’t changed for them financially for the holidays since last year.

Budgeted Holiday Spending In 2023 Is Only Slightly Higher Than In 2022

When asked if they budget for holiday spending, nearly 3 out of 5 U.S. adults reported that they set a holiday spending budget. While they’re budgeting more for the holidays this year, it isn’t by much. In fact, the average budget for gifts in 2023 is only 6% more than 2022, and remains under $200 for holiday home decor.

While the average budget for the 2023 season was higher, 47.9% of budgeters reported that they plan to decrease their spending this year. With inflation making headlines the past 2 years, it comes as no surprise that it was the main reason for the reduction in spending amongst 51% of respondents with a decreased spending plan for the holidays.

Whether they’ll stay within their budget or not is yet to be seen. However, it looks promising. When budgeters looked back on the 2022 holiday shopping season, more than half believed they spent around what they budgeted and only 13% reported spending over their budget.

The remaining 35.3% of all respondents who do not set a holiday budget said they choose not to for various reasons – the top being not planning on spending enough to warrant a budget (35.3%) and not wanting to restrict their spending (30.1%).

Holiday Spending Trends by Generation

When it comes to those who don’t budget for the holidays, Baby Boomers are statistically less likely to set a financial plan this season, with 45.6% saying they don’t budget for the holidays. The generations most likely to arrange a holiday spending budget were Gen Z and Millennials. Gen Z was the only generation, on average, to believe they would spend more without a budget than with one.

Amongst all generations of budgeters, Gen X planned to spend the most money ($717 total) and had the highest budget for gifts. Meanwhile Gen Z planned to spend the least ($591 total) but set the highest amount for all age groups when it came to holiday decor.

Gift Giving By Generations

Physical items, like candy, clothes, electronics and toys, were the most popular gift buying choices for all generations. For the remaining gift giving choices, the most popular within each generation were:

• Gen Z: Homemade items
• Millennials: Subscriptions
• Gen X: Gift cards
• Baby Boomers: Gift cards

Spending The Holidays With Family Can Cost You 53% More

Spending the holiday with family in town or children at home is a tradition for many, but it can come at a cost (literally). On average, respondents that indicated they plan to stay with or have family stay with them this holiday season are gearing up to spend 53% more on average than those who don’t.

Of those celebrating with family this year, 75% plan to set a holiday spending budget. And despite the fact that they’re spending more overall than those not celebrating with family, they’re also statistically more likely to decrease their budget this year. Over half of those spending the holidays with family this year indicated that their overspending in 2022 was a moderate to serious problem.

Holiday Spending By Income

Some households may be feeling the effects of inflation, with over half of budgeting households making less than $100K reporting that they plan to decrease their budget this year.

Of those households that don’t plan to budget for the holiday season, the most popular justification among each income bracket was:

• Less than $50K: My income is variable or inconsistent.
• $50-$100K: I don’t plan on spending enough to budget.
• $100-$200K: It’s too much work/overwhelms me.
• Over $200K: I don’t feel like I need to restrict my spending.

Households within the $50-$100K income bracket were statistically more likely to overspend because of marketing and advertising. Of those households, 43% reported overspending last year because they were exposed to too many things they saw and wanted to buy. Holiday sales like Black Friday and Cyber Monday could be a huge contributor to this holiday season’s overspending, given that many shoppers are seeking out deals on items finally going on sale.

When looking at the different kinds of gifts consumers were planning to buy this year, experiences were the most popular kind of gift giving option among households making over $100K. Of those households, 66% plan to gift experiences like vacations, dinners and classes this holiday season. 

Implications Of The Holiday Spending Season

While only 13% of respondents felt as though they overspent last year on holiday purchases, 51.8% of Americans in that group found it to be a moderate to severe problem for them financially. Overspending during the holidays can lead to many consumers racking up various kinds of debt, especially credit card debt. As of August 2023, The Federal Reserve Bank of New York reported credit debt alone hit a staggering $1.03 trillion. With the cost of goods increasing, many holiday shoppers could see themselves spending more than they anticipate this season.

So how are consumers making room for extra holiday expenses? 3 out of every 10 respondents plan to save money by cutting other costs during the holidays this year.

Here’s where they’re cutting costs:

Budgeting Goals For The New Year

After the frenzy of October through December’s holidays comes a fresh new year of possibilities. With new possibilities comes new opportunities to take hold of financial health and goals. Rocket Money asked respondents a variety of questions about their personal finance goals for the new year.

On a scale of likelihood, 48.5% of respondents said they are likely to extremely likely to make budgeting a part of their new year’s resolution. Of those that plan to make budgeting a goal, 66.7% have already started evaluating their overall 2024 financial budget as of October 1, 2023.

Contributing to emergency savings account was the most popular save money goal and personal spending was the most popular goal to cut spending on. Rocket Money found that consumers can save hundreds a year in personal spending on popular costly subscriptions plans by simply looking at their options and changing subscription plans.

Gen Z and Millennials were most likely to make budgeting a part of their New Year’s resolutions. Of Gen Z, 33.7% plan to start saving up for a home in 2024. According to a Rocket Mortgage study on Gen Z homeownership, 71.5% plan to buy a home in 1-6 years.

Will Americans reach their financial goals in 2024 despite the many challenges they’re facing economically? We won’t know until next year, but we'll be sure to report it in our 2024 study.

Methodology

To understand more about the holiday spending habits of consumers, Rocket Money surveyed 2,000 U.S. adults ages 18 and up planning to celebrate a winter holiday this year. Respondents were asked a variety of questions on topics such as plans to budget, approximate spending, last year’s holiday spending, and personal finance goals for 2024. This survey was U.S. Census balanced on gender, age, region of the United States, ethnicity/race, and household income. This survey was completed on October 1, 2023.