Rising Living Costs Lead Americans to Cut Holiday Spending in 2025
In a recent survey conducted by BMO Financial Group, it was revealed that a significant majority of Americans are adjusting their spending habits due to concerns about rising living costs. As the holiday season approaches, many individuals are feeling compelled to cut back on their expenditures to ensure financial stability heading into 2025.
According to the BMO Real Financial Progress Index, approximately 72% of Americans anticipate giving fewer presents this year. The survey indicates that the average holiday spending is projected at $550, but many participants express doubts about whether this will suffice. Specifically, 37% of respondents acknowledged they are buying fewer gifts to save money, while another 35% noted that their budgets from previous years simply won’t stretch as far this time. Paul Dilda, Head of Consumer Strategy at BMO, emphasized that while the holiday season is traditionally a time for spending and reconnecting with loved ones, the current economic climate is fostering financial anxiety among families.
Over the past quarter of 2024, 57% of Americans reported deepening worries about their everyday costs, highlighting a shift in priorities as income struggles to keep pace with inflation. Scott Anderson, Chief U.S. Economist at BMO, remarked on the precarious nature of financial progress during such trying times, stating, "The cost-of-living battle has been two steps forward and one step back, as Americans experience fleeting gains only to be met by new inflation challenges." Despite these pressures, many consumers still wish to maintain some festive spirit, resulting in a complicated landscape for holiday spending.
The survey reveals that over half of Americans (53%) are experiencing financial stress because of holiday spending. Alarmingly, families with children are feeling this impact more profoundly, with two-thirds (67%) of parents expressing anxiety about expenses, stressing over their ability to provide a joyful holiday season within their financial constraints. Many households are faced with the reality that 35% of parents with children expect to take four months to recover from their holiday debt, and a quarter of respondents will still be working off their holiday bills into March 2025.
To navigate these changing dynamics, a third of respondents have altered their travel plans, opting out of holiday vacations due to limited savings. A striking 47% now prioritize essential living expenses over travel, demonstrating a clear shift in mindset that echoes the survey’s findings.
As Americans prepare for the New Year, more than 28% indicate plans to cut back on their spending in 2025, a direct reflection of the financial anxieties stemming from current economic conditions. Dilda suggests that setting clear financial goals as the calendar turns can be pivotal in achieving stability. Although only 25% of respondents plan to develop a budget for the new year, BMO encourages individuals to utilize this opportunity to align their spending and saving strategies to mitigate financial woes.
BMO provides guidance and tips for creating and maintaining a budget to better prepare for the upcoming year. Firstly, consumers are advised to establish a realistic budget now and continuously review their financial standings throughout the year. Developing a separate budget specifically for holiday plans can alleviate stress for future seasons. BMO's Real Financial Progress Hub serves as a valuable resource for customers seeking personalized financial advice and tools to meet their goals.
Furthermore, Americans should be vigilant about recurring expenses that could strain their budgets during the holiday season. Identifying hidden costs, such as seldom-used subscriptions, can lead to significant savings. BMO's Total Look allows customers to manage all financial accounts, providing a clearer picture of their financial situation.
Consumers are also encouraged to leverage rewards programs or loyalty points to alleviate some holiday spending. By monitoring credit card rewards, individuals can make the most of their financial resources. Utilizing BMO CreditView will enable customers to check their credit scores and manage their credit profiles effectively.
Lastly, seeking professional assistance from financial advisors may offer tailored financial strategies that reflect individual circumstances and commitments. Setting up regular savings accounts can also motivate consumers to achieve savings milestones ahead of holidays to buffer against future stress. The BMO Savings Builder Account, with features that allow for unlimited transfers and no monthly fees, could simplify saving while offering competitive interest rates.
As the festive season approaches, it's clear that many Americans are taking a cautious approach to spending, driven by the realities of rising costs. Planning and strategic financial management can help navigate the forecasts of strained budgets and create a clearer path for financial progress in the coming year.
According to the BMO Real Financial Progress Index, approximately 72% of Americans anticipate giving fewer presents this year. The survey indicates that the average holiday spending is projected at $550, but many participants express doubts about whether this will suffice. Specifically, 37% of respondents acknowledged they are buying fewer gifts to save money, while another 35% noted that their budgets from previous years simply won’t stretch as far this time. Paul Dilda, Head of Consumer Strategy at BMO, emphasized that while the holiday season is traditionally a time for spending and reconnecting with loved ones, the current economic climate is fostering financial anxiety among families.
Over the past quarter of 2024, 57% of Americans reported deepening worries about their everyday costs, highlighting a shift in priorities as income struggles to keep pace with inflation. Scott Anderson, Chief U.S. Economist at BMO, remarked on the precarious nature of financial progress during such trying times, stating, "The cost-of-living battle has been two steps forward and one step back, as Americans experience fleeting gains only to be met by new inflation challenges." Despite these pressures, many consumers still wish to maintain some festive spirit, resulting in a complicated landscape for holiday spending.
The survey reveals that over half of Americans (53%) are experiencing financial stress because of holiday spending. Alarmingly, families with children are feeling this impact more profoundly, with two-thirds (67%) of parents expressing anxiety about expenses, stressing over their ability to provide a joyful holiday season within their financial constraints. Many households are faced with the reality that 35% of parents with children expect to take four months to recover from their holiday debt, and a quarter of respondents will still be working off their holiday bills into March 2025.
To navigate these changing dynamics, a third of respondents have altered their travel plans, opting out of holiday vacations due to limited savings. A striking 47% now prioritize essential living expenses over travel, demonstrating a clear shift in mindset that echoes the survey’s findings.
As Americans prepare for the New Year, more than 28% indicate plans to cut back on their spending in 2025, a direct reflection of the financial anxieties stemming from current economic conditions. Dilda suggests that setting clear financial goals as the calendar turns can be pivotal in achieving stability. Although only 25% of respondents plan to develop a budget for the new year, BMO encourages individuals to utilize this opportunity to align their spending and saving strategies to mitigate financial woes.
BMO provides guidance and tips for creating and maintaining a budget to better prepare for the upcoming year. Firstly, consumers are advised to establish a realistic budget now and continuously review their financial standings throughout the year. Developing a separate budget specifically for holiday plans can alleviate stress for future seasons. BMO's Real Financial Progress Hub serves as a valuable resource for customers seeking personalized financial advice and tools to meet their goals.
Furthermore, Americans should be vigilant about recurring expenses that could strain their budgets during the holiday season. Identifying hidden costs, such as seldom-used subscriptions, can lead to significant savings. BMO's Total Look allows customers to manage all financial accounts, providing a clearer picture of their financial situation.
Consumers are also encouraged to leverage rewards programs or loyalty points to alleviate some holiday spending. By monitoring credit card rewards, individuals can make the most of their financial resources. Utilizing BMO CreditView will enable customers to check their credit scores and manage their credit profiles effectively.
Lastly, seeking professional assistance from financial advisors may offer tailored financial strategies that reflect individual circumstances and commitments. Setting up regular savings accounts can also motivate consumers to achieve savings milestones ahead of holidays to buffer against future stress. The BMO Savings Builder Account, with features that allow for unlimited transfers and no monthly fees, could simplify saving while offering competitive interest rates.
As the festive season approaches, it's clear that many Americans are taking a cautious approach to spending, driven by the realities of rising costs. Planning and strategic financial management can help navigate the forecasts of strained budgets and create a clearer path for financial progress in the coming year.
Topics Financial Services & Investing）
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