How to Help Others Avoid a Last-Minute Budget-Busting Holiday Splurge

By Madeline Kennedy

December 21, 2016

With just a few days left before Christmas, many shoppers have finished buying gifts. But that only makes these last few days treacherous for budgets—a time when even careful shoppers are vulnerable to last-minute impulse purchases.

Such vulnerability is especially acute this year, as jobs, wages and the economy have continued to recover and consumers are feeling more flush than they have in nearly a decade. Shoppers were expected to spend 10% more on holiday gifts this season, reaching the highest average spend since the financial crisis: $1,121 per household, according the PwC Holiday Outlook.

Consumers with annual household incomes less than $50,000 were expected to increase their spending even more. This should raise a red flag. Those who can least afford to splurge had planned to do so, and probably should shut down now. After all, 64% began holiday shopping even before Black Friday and 29% had expected to be done by then, PwC found.

The most likely to overspend were so-called hipsters, young upwardly mobile, college-educated Millennials living in enclaves such as Austin, Brooklyn, Oakland, and Portland, according to the report. This group planned to outspend the average consumer by $500—with a third of it being spent on themselves.

That doesn’t necessarily mean they are being selfish. Shoppers this year were expected to give an average of $244 to their favorite causes; they overwhelmingly favor retailers committed to corporate social responsibility. In turn, 75% of retailers pledged to make charitable contributions linked to purchases, PwC found.

In these last few shopping days parents, teachers and families should encourage others not to exceed their spending plans in a frantic last-minute effort to get just the right gift. The people they are buying for don’t really care anyway, research shows. They are just as happy getting something quick and easy.

With mobile shopping and free delivery, quick and easy has never been simpler—or more of a problem for those prone to splurging. Digital sales were expected to jump 25%, as were mobile purchases. To make it even easier, 60% of retailers offered free shipping and free returns this holiday season, PwC found. The good news with mobile shopping is that it makes it much easier to hunt for the best price.

Only a quarter of holiday shoppers saved or set a budget for the season, and only a third of those who set a budget were likely to stick with it, a TD Bank study found. Now is the time when a lot of planning goes out the window. It’s not too late to track spending with a budgeting app like those from Mint or Level Money.

Lastly, encourage family, friends and students to spend cash, not plastic, the next few days in order to rein in spending impulses. They may suffer an eggnog hangover next week. But that only hurts for a day. A holiday debt hangover can last for months.

Posted in Sponsored Content on December, 2016