If we’re being honest, our expectations (and our kids’ expectations) for Christmas have gotten out of control
Americans observe Giving Tuesday amid the holiday shopping rush
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Here’s the thing: American culture constantly applauds consumerism. We’ve even made special holidays to celebrate it (I’m looking at you, Black Friday and Cyber Monday). Many of us will do just about anything to justify a "deal," especially at this point in the year when Christmas shopping is more top of mind.
While giving gifts is a good-hearted idea, it can lead to some serious money problems if you use your credit card during checkout. Last year, 27% of shoppers used debt for holiday shopping, and about 30% of them are still stuck paying off those purchases a year later! And according to a 2024 report by the Morning Consult Pro, "One-fifth (20%) of U.S. adults said they’ll have to go into debt to pay for holiday celebrations and obligations."2 This doesn’t have to be you.
I’m going to step on some toes for a minute. If inflation has made your budget tighter because the cost of living has gone up, that’s not an excuse to go into debt. It’s up to you to bite the bullet and either get creative and find ways to make more money or cut back on your Christmas budget.
Why People Go Into Debt Over the Holidays
Becoming aware of common pitfalls is the first step to breaking out of the pattern of relying on debt for holiday shopping. Let’s talk about three reasons people take on debt during the holidays and some strategies to use so you don’t fund your festivities this way.
1. Christmas Expectations in America
If we’re being honest, our expectations (and our kids’ expectations) for Christmas have gotten out of control. In this social media era, it’s easy to feel pressured to go into debt to get the Instagram-worthy Christmas the popular girl from high school posted about last year. My dad, Dave Ramsey, always says, "We buy things we don't need with money we don't have to impress people we don't like," and this is one of the biggest reasons so many people go into debt.
I want to give you permission to let Christmas look different for your family, especially if you’re trying to save money.
Comparison is a trap. At the same time, I get it, especially as a mom. There can be this invisible pressure to create the most magical Christmas for your family, particularly if you want to do things for your kids that your parents couldn’t do for you. If any of this sounds like you, I understand. I’m honestly proud that you want to create a better life for your kids than what you had, but going into debt to do it is not the answer. Debt robs you of peace of mind and the opportunity to build a legacy for your kids.
2. Consumer Behavior
The problem starts with believing it’s not a big deal to go into debt or swipe a credit card for your holiday gifts. Did you know credit cards didn’t even exist until 1950? In the decades since then, people have depended on credit for Christmas shopping, and it’s time to break this pattern. The easiest way to break this habit we have as a society is to cut up your cards and decide you’ll only use the money that’s in your bank account.
Not every meaningful gift has to have a high price tag. (iStock)
Other behaviors that can get you into trouble are impulse shopping and shopping without a plan. Stores love to tempt you to pick up a few extra candles or a beautifully wrapped chocolate box near the checkout line, but don’t give in!
3. Lack of Financial Margin
When you don’t have any margin in your budget, it can be a lot more tempting to take on debt, especially during the holidays. If you’re living paycheck to paycheck, the last thing on your mind is putting money aside for holiday shopping. So, what do you do? You might feel tempted to use debt to grab that adorable toy kitchen set your kids have been wanting even if it doesn’t fit the budget.
And even if you aren’t swiping your credit card, maybe you’ve thought about using payments through a buy now, pay later program to fund your Christmas shopping. Listen to this: According to a PYMNTS Intelligence report, "Consumers using BNPL and other pay-later options during the [2023] Black Friday shopping frenzy spent 48% more than those using other payment methods."3 So while these programs might seem like they’re helping you out in a pinch, they’re likely costing you so much more in the long run.
(Tell your friends and family you’re not going into debt for presents. Maybe this just means you prioritize buying gifts for the people in your house. )
Realistic Ways to Avoid Debt
OK, so we know the why behind holiday debt, but how do we actually avoid it? Here are my top four tips to set you (and your family) up for success so you can avoid debt while still enjoying this time of year.
1. Make a Christmas budget
Go ahead and make a plan for how much you’ll set aside for Christmas spending this year. Personally, I use the EveryDollar app to budget because it’s a super simple way to keep my money organized. I recommend making Christmas its own category in your budget. Then, within the category, make a list of everyone you want to spend money on and put dollar amounts by their names. It might feel a bit detailed, but it’ll help you stick to your budget when you’re thinking about adding extra items to your cart.
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2. Manage expectations
I want to give you permission to let Christmas look different for your family, especially if you’re trying to save money. Tell your friends and family you’re not going into debt for presents. Maybe this just means you prioritize buying gifts for the people in your house. Or maybe you guys only do presents for the kids this year. (I’m sorry, I just don’t think you should feel pressured to buy gifts for adults.)
3. Be creative
Not every meaningful gift has to have a high price tag. Who doesn’t love getting a homemade batch of cookies, right? Also, think about gifting your kids an experience that lets you make memories as a family. Ultimately, your kids value your time and attention so much more than a nice pair of shoes.
Christmas tree near fireplace in decorated living room (iStock) (iStock)
4. Start a sinking fund for next Christmas
It might be a little late to do this for Christmas 2024, but once January 2025 hits, start saving a little bit every single month for your Christmas expenses. Also, remember that lots of Black Friday sales start in mid-November. Planning ahead for Christmas 2025 will help you hop on those deals early.
As you’re getting into the swing of holiday shopping, don’t dig yourself into a financial hole for gifts people might not remember.
You’re still a good parent, friend and neighbor if you don’t buy everyone on your list an expensive gift. Believe me, 2025 will feel a lot better if you go into the new year with the peace of mind that comes from knowing you don’t owe anyone anything.
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Rachel Cruze is a two-time #1 national bestselling author, financial expert and host of "The Rachel Cruze Show." Since 2010, Rachel has served at Ramsey Solutions, where she teaches people how to avoid debt, save money, budget, and win with money at any stage in life. She’s authored three bestselling books, including her latest, "Know Yourself, Know Your Money: Discover WHY You Handle Money the Way You Do," and "WHAT to Do About It!" Follow Rachel on Twitter, Instagram, Facebook and YouTube or online at rachelcruze.com.
