The Holiday Money Mistake People Keep Making—Because They Don’t See What’s Driving It

Why Holiday Spending Gets Away From You

The holidays are supposed to be a time of peace and happiness. Instead, for many Americans, they often lead to debt, stress, and regret.

On behalf of the American Institute of Certified Public Accountants (AICPA), The Harris Poll recently surveyed 2,084 adults about their holiday spending habits. The responses indicate that spending often spirals out of control, with easy access to credit, social pressures, aggressive marketing, and impulse buying mainly to blame.

“Sometimes, a person’s desire to show just how much they love someone is to buy their loved one something beyond their budget,” said Carolyn McClanahan, founder and president of Life Planning Partners, Inc. “I think there is a subconscious thought that the more expensive the gift, the more they’ll feel how much they are loved.”

According to McClanahan, this sense of duty or guilt is exacerbated by advertising. “There is intense media pressure,” she said. “Between social media influencers peddling an unobtainable lifestyle and commercials coming from every direction—your phone, the TV, mail, and even gas pumps—it’s hard to get away from it. All the marketing hype conveys this idea that everyone has it better than you, so you try to keep up by joining the spending hype.” 

What New Data Reveals About Holiday Budgets, Overspending, and Regret

AICPA’s survey produced several notable findings. Arguably, the biggest takeaway was that many people fund their holiday shopping by borrowing money, end up regretting it, and then repeat the process.

Nearly four in ten respondents (39%) admitted they’ve regretted overspending during the holidays, yet 79% still plan to rely on credit cards this year. Even worse, half (52%) said they don’t expect to pay off the balance when the bill arrives. In other words, by the time you pay the money back, the gift that seemed like a good deal will likely have ended up costing you substantially more.

The obvious solution would be to save for the occasion and spend within your means—you know, creating a budget. But not many people follow that advice. According to the survey, only one in four Americans makes a holiday budget, and those who do admit they “probably won’t stick to it.”

Smart Moves That Make Avoiding This Holiday Mistake Much Easier

The AICPA says the best way to avoid overspending is to decide who you want to buy for and then set an affordable budget for each person before you start shopping. The AICPA also recommends making your list in advance and thinking carefully before buying anything that isn’t already on it. Tracking your spending as you go can also help you stay on target.

For certified financial planner McClanahan, it’s important to eliminate any temptation to fall victim to retail tricks and marketing psychology, which is much more achievable if you don’t leave purchases until the last minute and have a plan in place.

“Shop throughout the year for thoughtful gifts so you don’t have to fall for the hype during the holiday season,” she said. “Make a list of what you are going to buy and stick with it. The sales displays and ads can push your impulse button, and a list keeps you from giving in to those impulses.”

For couples navigating holiday gifting, McClanahan said, it’s crucial to agree on a spending budget together beforehand, and it’s also important to consider gifts that don’t cost money.

“Couples should create gifting policies that help them get on the same page about the cost of gifts and how they like to give and receive gifts. This way, they won’t feel the need to outdo each other to show their love,” she said. “[Also] consider gifts that don’t cost money. For example, my husband is a photographer and occasionally needs a model to test equipment or lighting. I do not like being his model, but I lovingly give him gift certificates to be a stand-in model.”