As US holiday spending hits $1 trillion, expert offers tips to keep spending in line

Holiday spending in the United States this year is expected to top the $1 trillion mark for the first time in history, according to the National Retail Federation (NRF), which sponsors consumer surveys, including annual holiday spending surveys.

NRF predicts retail sales in November and December will grow between 3.7 percent and 4.2 percent over the corresponding time frame in 2024. “The equates to total spending between $1.01 trillion and $1.02 trillion,” the NRF report states. “By comparison, last year’s holiday sales rose 4.3 percent over 2023 to reach $976.1 billion.”

“Prices have gone up because of tariffs and other factors,” explained Usha Rackliffe, assistant professor in the Practice of Accounting in Emory University’s Goizueta School of Business. “That’s why consumers this year should be especially careful not to allow December merriment to turn into January dread.”

Rackliffe said, “The key is to remain thoughtful, mindful, and intentional as you spend for the holidays. Make a list of those you will be buying for as well as other anticipated expenses and what you plan to spend on each item. Don’t forget to include tips for people who provide services to you throughout the year such as your hairdresser or the doormen in your apartment building.”

The rule of thumb is to plan to spend 1 to 2 percent of your net annual income on the holidays, she continued. “If, for example, your family annual net income is $100,000, think in terms of spending between $1,000 and $2,000. That’s just a guideline, however, so stay within your comfort zone.”

Artificial intelligence (AI) can be really helpful in gift buying, according to Rackliffe. “If you’re looking for gift ideas in the $10 to $15 range, for example, AI can produce a list that can give you lots of ideas even if there’s nothing specific on the list that feels right. You can even narrow the list to things for a sports lover or someone who likes baubles,” she said.

A holiday spending budget should include a small contingency fund—maybe $100—for unexpected expenses such as secret Santa events or holiday parties at work, or an impromptu celebration meal with friends or co-workers, Rackliffe advised.

The biggest pitfall is impulse spending, she warned. “It is tempting to see something for 40 percent off and buy it because of a good price, but unless it’s something you were planning to buy anyway you’ve wasted the 60 percent that you spent,” Rackliffe pointed out.

“Pause before you purchase,” she continued. “Just as it’s a bad idea to go grocery shopping when you’re hungry, it’s a bad idea to shop when you’re feeling pressured to get done. Hasty decisions can lead to a lot of buyer’s remorse.”

What one spends isn’t as important as maintaining the spirit of season, Rackliffe suggested. “You can elevate a simple gift—even something you made yourself such as cookies or a piece of artwork—by wrapping it beautifully or pairing it with something thoughtful. For example, if you give someone a restaurant gift card, you can include a charmingly presented copy of the menu.”

Planning ahead for holiday spending is the best way to avoid financial stress as the season draws near, Rackliffe said. “If you have decided that you will spend $1,200 for the holidays, put aside $100 each month, then when the season comes, you already have the money, and you don’t have to fret about it.”

Buy now, pay later can be really tricky, she warned. “Usually, there is a date by when the purchase must be paid for or an interest rate that can be really high kicks in,” she said, adding that those putting some or all of their holiday purchases on credit cards should plan to pay the cards off by the end of February or they risk still having holiday bills when they would like to be putting money aside for summer vacations.

“The best gift that you can give yourself each year is to feel good in January, knowing that you didn’t overspend during the holiday season,” Rackliffe said.