Gift spending falls sharply

Holiday gift budgets have contracted sharply this year. NerdWallet reports that the average consumer now plans to spend roughly $880 on presents. That figure represents a 21 percent decline from last year, when expected spending hovered just above $1,100.

Kim Palmer, a personal finance expert at NerdWallet, attributes the drop to persistent inflation. She notes that rising prices across various consumer categories are forcing households to reassess their spending. Palmer says people are under financial stress and must find ways to celebrate without overspending. This includes reducing travel expenses and staying closer to home.

The report highlights a shift in payment habits. Consumers are increasingly using buy now, pay later services to spread costs over several months. Palmer describes this trend as risky because it constitutes debt that must be repaid. She warns that these obligations can become burdensome when January arrives.

To manage costs, Palmer advises shoppers to create gift lists early. She suggests spreading purchases across multiple months rather than concentrating them in December. Tracking specific items and waiting for sales is another recommended strategy, as prices often dip as the holiday season nears.

Palmer also urges caution regarding savings accounts. Shoppers should avoid dipping into emergency funds for holiday shopping. Sticking to the pre-made list helps resist impulse buys. These steps aim to keep holiday expenses within manageable limits for households facing tight budgets.