Holiday gift spending drops to $880 per person

American households face tighter budgets as the holiday season approaches. The average person now plans to spend approximately $880 on gifts, a 21% reduction from the $1,100 average recorded last year, according to a new report from NerdWallet.

The decline reflects a widespread effort to manage household cash flow. Kim Palmer, a personal finance expert at NerdWallet, attributes the cutbacks to inflation and higher prices across various sectors. Consumers are reducing travel plans and staying closer to home to offset the cost of gifts and other seasonal expenses.

Palmer describes the current financial climate as a period of stress for many families. “The really big underlying story is that people are stressed out financially because prices have been rising across so many consumer categories, and so people are really forced to think, OK, how can I cut back while still celebrating the season,” she said. “And so, people are doing that by spending less overall.”

To manage these tighter budgets, Palmer suggests creating a shopping list early and spreading purchases over several months rather than concentrating them in December. She advises shoppers to monitor items on their lists and wait for price drops that often occur closer to the holidays.

Payment methods are also shifting. “We found that people are turning to buy now, pay later, where you can spread out payments over several months,” Palmer noted. “Of course, it’s a little bit risky because it’s a form of debt and you have to pay it back eventually, so that can be difficult once January hits.”

She recommends avoiding the use of emergency savings for holiday shopping. Shoppers should stick strictly to their lists and resist impulse buys to maintain financial stability through the end of the year.