Gift spending falls 21 percent

The average consumer plans to spend $880 on holiday gifts this year, down 21 percent from the previous holiday season.

According to NerdWallet’s latest holiday spending report, this figure marks a sharp decline from last year, when expectations hovered just above $1,100. The drop reflects a wider pattern of restraint among households facing sustained price increases. Kim Palmer, a personal finance expert at NerdWallet, attributes the shift to financial stress caused by rising costs across various consumer categories. She notes that shoppers are not only cutting gift budgets but also scaling back on travel and other discretionary expenses to manage their overall spending.

The shift toward tighter budgets has altered how families approach holiday preparation. Previously, many consumers relied on last-minute purchases concentrated in December. Now, the strategy involves planning further in advance and distributing costs over several months. Palmer advises creating a specific shopping list early in the season and tracking items to buy during sales events, which often occur closer to the holidays. This approach helps mitigate the impact of higher base prices on the total holiday budget.

Payment methods have also changed in response to these constraints. Palmer observed an increased use of buy now, pay later services, which allow shoppers to spread payments over time. While this option provides short-term relief, she warns that it functions as debt that must be repaid, potentially creating financial pressure in January. To avoid this burden, she recommends using cash or checking accounts for holiday purchases and avoiding the use of emergency savings. Sticking to a pre-defined list and resisting impulse buys are essential steps to maintaining financial stability during the season.

The report indicates that the primary driver of this behavior is the need to celebrate the season while managing limited resources. Families are actively adjusting their spending habits to align with their current financial realities. The data shows a clear move away from discretionary excess toward calculated, list-based purchasing. This trend suggests a structural change in holiday financial planning rather than a temporary pause in spending.