25% of Consumers Will Spend at Least $1,000 More on the Holidays This Year Than Last

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  • A survey reveals that some consumers plan to increase their holiday spending, in large part because of gifts for themselves.
  • It's okay to spend more during the holidays as long as it doesn't result in debt.

Are you planning to do the same? If so, it's crucial that you avoid debt in the process.

The 2020 holiday season was disappointing for a lot of people. Many Americans were struggling financially at that point, the economy was in poor shape, and families were being forced to stay apart due to COVID-19 concerns.

This year, consumers seem to have a more positive outlook on the holidays, according to a new report from MassMutual. Not only is the economy in a stronger place, but the jobless rate has declined substantially since last year's holiday season. And with COVID-19 vaccines being widely available, many people are looking forward to celebrating the holidays with family once again.

Not surprisingly, consumers generally plan to increase their holiday spending this year. Among those who do, 42% expect to spend at least $500 more than they did last year during the holidays, and 25% expect to spend at least $1,000 more. All told, Americans expect to spend an average of $1,243 on holiday purchases.

What are consumers spending more on?

Most people who expect to increase their spending for the 2021 holidays say that shopping will be the main source of those extra bills. Interestingly, about half of those who plan to spend more say that gifts they purchase for themselves will contribute to that higher tab.

Another driver of increased holiday spending is travel. Similarly, attending and hosting gatherings and celebrations will cause many consumers to spend more.

Avoiding debt during the holidays

After a difficult 2020 holiday season, it makes sense that many people are looking to go all out this year. And to be clear, there's nothing wrong with spending more if you can afford to do so without landing in debt.

It may be that you've been socking money away in your savings account all year in anticipation of a more robust holiday season. If so, you should absolutely feel free to dip in. Or, maybe you took on a side hustle in recent months to pad your holiday budget. That's money you shouldn't hesitate to spend.

But one thing you should try not to do is spend so much on the holidays that you close out the season with a pile of debt. Not only can debt be costly -- if you rack up credit card balances, you'll be charged interest on the ones you can't pay in full -- but it can also damage your credit score, making it difficult to borrow money when you need to. In fact, too much holiday debt could ruin some of your financial plans for 2022, like buying a home.

Debt is also stressful. The idea of owing money is something you might find upsetting and lie awake at night thinking about. And losing a big chunk of your paychecks to debt payments could leave you cash-strapped in the new year.

If you're going to spend more during the holidays this year, spend carefully. Set a budget ahead of time so you know where your spending should max out, and make a list of holiday expenses in order of priority so you can allocate your money efficiently. That way, you can enjoy the holidays to the fullest without regretting your spending afterward.

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