'TIS THE SEASON…FOR SPENDING - Six in 10 Americans Will Not Use Budget for Holiday Shopping
DENVER—A new poll from the National Endowment for Financial Education® (NEFE®) finds many Americans have concern over how they will pay for their holiday expenses in this "bah humbug" economy. According to an online survey commissioned by NEFE and conducted by Harris Interactive in November 2011, 49 percent of Americans are much/somewhat more concerned about being able to afford holiday expenses this season, compared to their level of confidence five years ago before the recession and economic downturn. As a result, 54 percent of those who have holiday expenses plan to spend less this year than they did five years ago.
"Americans are facing a lot of challenges because of the duration of the current economic climate, so it's no surprise there is heightened concern over how much money people can spend on their loved ones," says Ted Beck, president and CEO of NEFE.
In a season that means "black" for many retailers, one red flag has risen among consumers. The NEFE survey finds 63 percent of Americans will not set or have a budget for their holiday shopping. "It's concerning that the majority of shoppers this holiday season will not have a spending plan along with their shopping list," says Beck. "Having a gift budget really helps keep spending on track and prevents a situation where emotion takes over."
Among the numerous expenses associated with the holidays, 65 percent of Americans anticipate gifts to be their largest expenditure this year, with 60 percent planning to spend the most on family members. Top expenses for the remainder include: food/groceries for holiday meals (12 percent), travel (8 percent), entertainment/entertaining or holiday greeting cards (both 2 percent), gift wrap/decorating and other (both 1 percent). Ten percent anticipate not having any holiday-related expenses this year.
Of those who anticipate having holiday expenses this year, 67 percent of Americans plan to use cash. Forty-five percent anticipate paying by credit, with 32 percent paying the full balance within the first statement cycle and 13 percent not paying off the full balance within the first statement cycle. Seventeen percent expect to use savings, 7 percent will use layaway, 5 percent will rely on a holiday or year-end bonus, 3 percent plan on help from relatives or friends, 2 percent a short-term loan and 5 percent plan to pay by other means.
"One thing people should keep in mind this holiday season that will serve them well into the next year is that the greatest gift you can give your family is financial stability by not overspending," Beck says. For tips, resources and information on holiday spending, visit www.smartaboutmoney.org/holiday.
Survey Methodology
This survey was conducted online by Harris Interactive on behalf of NEFE from November 10-14, 2011, among 2,810 adults age 18 and over. Data were weighted using propensity score weighting to be representative of the total U.S. adult population on the basis of region, age within gender, education, household income, race/ethnicity and propensity to be online. This online survey is not based on a probability sample and therefore no estimate of theoretical sampling error can be calculated.
About the National Endowment for Financial Education (NEFE)
NEFE is an independent nonprofit organization committed to inspiring empowered financial decision making for individuals and families through every stage of life. For more information, visit www.nefe.org.
From gifts and parties to decorations and travel, there are numerous financial pressures associated with the holiday season. NEFE offers these five tips to manage spending this holiday shopping season:
1. Make a budget and commit: List all of the gifts and decorations you plan to buy, the parties you will attend and the travel expenses you anticipate. Do not exceed your preset limits.
2. Make a gift list and check it twice: List all family members, friends and co-workers for whom you plan to make purchases. Be flexible in cutting the list to accommodate your budget if needed.
3. Comparison shop: Consider online shopping to get the best deals, but be sure to figure in shipping costs. Check sale ads regularly and be selective in your shopping. Once you have purchased a gift for someone, cross him or her off your list. Avoid adding last-minute impulse items just to make your gift seem more meaningful.
4. Make concessions: To maintain your budget, you may have to cut down your list of gift recipients. You also may have to be selective in what parties you will attend. Many people will add substantial costs with other activities, such as wrapping gifts and sending holiday cards. Avoid expensive wrapping and consider sending a letter rather than individual cards.
5. Best planning is to save: Although it’s late this year, remember, holiday spending is a recurring expense. You should establish a savings account that you regularly contribute to throughout the year. Ask your bank about setting up a designated account that money can be transferred to automatically.
