What is it about Christmas that makes people reckless with their wallets? It seems everyone throws financial caution to the wind; becoming irresponsible with their income. How is it that the commemoration of a baby being born in a manger and sleigh-dragging reindeer encourage budget-busting buying sprees? People completely forget how hard they’ve worked all year to make ends meet when the holiday season sends Santa swinging into town!!!
Holidays, especially Christmas, fills people with a different feeling than anything they’ve felt throughout the entire year. Children begin making lists and shopping becomes the daily exercise routine of many; as stores begin flaunting sale prices that are irresistible. For many, this time of year does nothing but put more stress on their finances. They end up maxing out their credit cards and taking out loans with crazy interest rates just to make things happen. It’s no secret that most people spend far more than the can afford to during this time of year.
The average household size in America in 2010 was 3.16, with only .93 of that number representing the amount of people under the age of 18 counted in the family composition. The median gross income for family’s with only one person earning money is less than $50,000. For two income households, the gross is a less than another $20,000; with an income totaling just around $67,000. When you think about it, that isn’t much to stretch over the course of a year; so imagine splurging!?!?
Each year, for the past 26 years, the American Research Group has conducted a survey designed to track Christmas spending. In November of 2010, the study found that on average, households spent nearly $660 on gifts. The same annual study, conducted exactly a year later, shows that spending was down by 2%. Yet, looking at the table below it’s clear that spending in 2010 was up more than half of what it was the year before. Between 2005 and 2009, the average amount that was spent on gifts declined from the previous year.
Spending on Average
Change by %
Many would be surprised to know that the average amount spent on Christmas is the same between one and two income households. This is largely due to the fact that the amount of money separating the two isn’t really significant when you consider family composition. That small margin simply makes up for the extra person in the family, it sort of balances things out.
It’s safe to assume that the majority of money spent goes towards gift purchasing. Included in the average are also decorations and things of that nature. Still, no matter what the average is in any given year, it is always more than families can realistically afford to spend. There are experts who have advice on what families should spend; as opposed to what they do.
If you’ve been trying to figure out how much is enough when it comes to your Christmas budget, many financial specialists say the same thing. They suggest that spend a maximum of 1.5% of your income, after taxes during the holiday season. In other words, if you gross $47,000 and pay $7,000 in taxes, your Christmas budget would be 1.5% of $40,000. That would amount to $600.
This may not seem like enough money, especially if you have a long list of people to shop for. Staying within a budget of this size can be a challenge for this particular occasion. But make a valiant effort to do it….even better, try to stay below it.
With the economy shifting the way that it’s been for the last few years, the average amount that families spend during this particular season changes from year to year. There are some studies that list each person as spending nearly $800 in a season. For a 2 income household, that is almost $1600. This is far too much money as far as experts are concerned. Numbers like that are usually seen in households with incomes within the 6 digit range.
No matter how much money you make, the amount of money suggested by the financial professionals can be more than enough to spend on Christmas. By shopping with a plan, you can manage to take care of your list and not go into debt in the process. There are things that you can do to help yourself stay within the designated budget:
- Start shopping early by buying the things you know people need. These are things that can be purchased throughout the year, as they are on sale or discounted.
- Try catching online deals for things that cost a little more in-store. It’s usually an easy way to catch a break on electronics and jewelry.
- Don’t be afraid to go generic. Paying for the name is usually what costs the most.
Families wait all year long to celebrate the holiday season with gift giving. Yet, they also work all year long to provide a good life and home. Why feel as though it were all in vain because you over did it again for Christmas? Now… you have to spend the first 6 months of the New Year crawling out of debt. Take the advice of the experts and put a lid on the pot. You’ll be thankful that you did.