- Just one month before the holiday season kicks into high gear, 60% of adults said they are living paycheck to paycheck, according to a new LendingClub report.
- Yet consumers still plan to overspend during the holidays, other reports show.
- We are in a period of “hyper-consumption,” says Jacqueline Howard, head of money wellness at Ally Bank.
Shoppers expect to overspend during the holidays
The LendingClub report was conducted in October, just one month before the holiday season kicks into high gear.
This year, holiday spending during the Thanksgiving week may hit a record as consumers try to maximize the weekend’s deals, according to a 2023 Deloitte Black Friday-Cyber Monday survey. Spending over the week is expected to jump 13% from last year, with shoppers shelling out $567 on average, Deloitte found.
Even as credit card debt tops $1 trillion, almost all — or 96% — of shoppers said they expect to overspend this season, according to a separate TD Bank survey.
Half of consumers plan to take on more debt to pay for holiday expenses, another report by Ally Bank found. Only 23% have a plan to pay it off within one to two months.
Some 74% of Americans say they are stressed about finances, according to a separate CNBC Your Money Financial Confidence Survey conducted in August. Inflation, rising interest rates and a lack of savings contribute to those feelings.
That CNBC survey found that 61% of Americans are living paycheck to paycheck, up from 58% in March.
Many households have tapped their cash reserves over the past few months, LendingClub and other reports show. More than one-third of consumers plan to dip into their savings even more to cover holiday spending, LendingClub also found.
“While consumers have found a way to manage through inflation, it’s concerning that many plan to tap into savings, and even exceed their budgets, to finance their holiday purchases, which may leave them vulnerable to an unexpected emergency,” said Alia Dudum, LendingClub’s money expert.
‘Hyper-consumption comes from not being mindful’
Consumers are increasingly adopting a “mentality of hyper-consumption,” said Jacqueline Howard, head of money wellness at Ally. That’s particularly true over the holidays, when families typically overspend on gifts.
“Hyper-consumption comes from not being mindful,” she added. “Consider what makes the most sense in terms of your well-being.”
Howard recommends a value-based budget approach when it comes to budgeting for holiday purchases — “if your priorities are family and travel or other experiences, have that guide your spending,” she said.
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