Inflation pushes more shoppers to budget this holiday season: survey

Inflation and higher costs are causing anxiety for consumers who are worried about overspending this holiday season, according to a recent TD Bank survey.

Seventy-four percent of survey respondents said that "the financial aspect of the holiday season makes them anxious," an increase from 66% in 2021.

Many respondents said they are taking extra steps to make sure they don't overspend, the survey said. Fifty-seven percent said they are creating a holiday-specific budget as one way to beat rising prices and 82% of consumers said they were "confident" that they can manage their spending.

"The continuing rise of inflation has added a tremendous level of anxiety and stress to many Americans, and it's understandable that this could impact how consumers decide to spend this holiday season compared to previous years," Matt Boss, head of consumer products at TD Bank, said. "It's important that consumers are in control of their finances, not only during the holiday season, but year-round. 

"The fundamental practice of having and maintaining an accurate budget can help them gain the confidence to maximize their spending goals and behaviors," Boss continued. 

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Consumers overspent by $300 in past holidays

Consumers are worried about overspending this holiday season, including those who have overspent in the past. Sixty-nine percent of consumers reported overspending during past holidays, the survey said. Of that group, 45% said they overspent by $300 or more. 

Many (36%) said they overspent because of pressure to find the perfect gift and 26% said they did so because of the desire to take advantage of holiday sales.

"Despite past behaviors, over-spenders are conscious of their future shopping habits," the survey said. "Ninety-two percent said they have considered adjusting their future holiday spending habits to avoid overspending – including spending less on gifts, sticking to a budget, gifting to fewer loved ones this year and more."

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HOLIDAY SHOPPING EXPECTED TO REACH OVER $1 TRILLION AS INFLATION SURGES

Americans shop earlier for deals 

Almost 90% of U.S. consumers are doing what they can to stave off financial challenges created by higher prices, Brett Narlinger, head of global commerce at Blackhawk Network, said.

One way they are addressing today's challenges is by changing how and when they shop, with many tapping holiday deals earlier to try to stay on budget, Narlinger said.

Inflation remains persistently high, with October's Consumer Price Index (CPI), a measure of inflation, rising to 7.7% year-over-year. That means consumers are spending more across the board on necessities like food and gas this holiday.  

At the same time, the cost of borrowing continues to rise for consumers. The Federal Reserve has raised interest rates five times so far this year. Interest rates are currently in a range of 3.75% to 4%, the highest level since January 2008. The Fed anticipated further rate increases going forward to bring inflation to a 2% target rate. 

"Money is tight for many Americans, and people are bracing for ongoing challenges related to inflation and high cost of living," Narlinger said. "We saw Americans do their back-to-school shopping earlier this year, and we're expecting similar buying behavior for the winter holidays."

Another way you could save on your monthly bills is to take out a debt consolidation loan to help pay off existing debt at a lower interest rate. You can visit Credible to compare debt consolidation loan options and find your personalized interest rate without affecting your credit score.

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