Holiday spending is driven largely by the current economic climate, among other factors. In order to help consumers keep their holiday budgets in check, WalletHub asked a panel of experts to share money-saving advice and insight on factors that affect holiday spending in this article. Haipeng (Allan) Chen, Gatton Endowed Chair in Marketing at the Gatton College of Business and Economics, offers these tips.
What tips do you have to help people avoid holiday overspending?
The short answer: Budget! Budget! Budget!
The long answer: Make sure you know how many gifts you need and set up a budget for each gift you plan to buy. And multiple each budget by 80%. That way, you will not overspend for any gift (even with tax and S&H), and you will not overspend overall.
How do you think the current social and economic environment is influencing household holiday spending decisions?
People have been holding back their spending, due to the reduction in incomes and the limited opportunity to spend (less traveling, few stores open). So be aware that your “shopping” self is ready to go on the spree. Again, budget! Budget! Budget!
How can people show love and appreciation over the holidays without spending money on gifts?
Remember, it is the “idea” that matters. When you are tired from a zoom meeting, or you decide to skip a game because there will be too many people, which will make you uncomfortable, spend some time writing a letter (Yes, the old fashion way, with a pen and a piece of paper) and tell your family and friends how you are, what you’ve done during the year, and what activities you plan to do with them next time (hopefully soon) you’ll see them.
Nearly 1 in 10 adults are shopaholics. How can someone tell if he or she is a shopaholic?
If you are buying just for the pleasure of buying, if you find all kinds of untouched/unused stuff in your closet/garage, if you are breaking your budget but not buying necessities.
Should we expect a rise in holiday spending this year or will COVID-19 negatively impact the holiday shopping season? What are some caveats shoppers should be wary about this year?
Oh, yes, people are tired of being stuck at home, and their self-control is wearing out (or has already worn out). It is a good time for retailers, but shoppers need to watch out!
Methodology
To help consumers avoid post-holiday regret, WalletHub calculated the maximum holiday budget for each of 570 U.S. cities using five key characteristics of the population, such as income, age and savings-to-monthly expenses ratio. Read more at 2021 Holiday Budgets by City.