Every year, we all look forward to closing off the year with a wonderful holiday season to bring us into a fresh start for the New Year, shared with our family and friends. While we should all aim to make the most of this holiday season, there is always the inevitable cost of all this holiday cheer. (Holiday expenses can drown you in debt. Find out how to avoid this festivity hangover. Check out Keep Holiday Debt From Snowballing.)
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There are many of us who like to compete with ourselves, and try to make each holiday season bigger, better and bolder, which always comes at a final cost that we are not always so keen to face, come the New Year.
So what does our typical holiday budget look like, and where does all of that money go?
With an estimated holiday budget of $688.87 for gifts this year, The National Retail Federation estimates that the average person will spend more this year than in in 2009.
People generally spend the bulk of their budget on their family ($393.55) and the remainder on their friends ($71.45), co-workers ($18.26) and others ($34.82). Let's not forget that each holiday season, we also plan to treat ourselves to the tune of $107.50.
You will notice that the numbers above don't add up to $688.87, but to $626.58. There is actually $62.29 left over, or 9% of worth of wiggle room that could possibly be earmarked for charitable donations this holiday season, or any unexpected reciprocal gift giving that might arise. (Find out why money can sometimes be the perfect gift. See Pass On Wealth To Spread Holiday Cheer.)
So what do people plan on giving the most of this season? Well the top gift this season is very likely to be gift cards, which will translate into $24.78 billion dollars or 52% of their total holiday spending.
An estimated 77.3% of Americans will buy at least one gift card with spending to reach approximately $145.61 on gift cards this year, with the top seven areas being:
- Department Store = 39.2%,
- Restaurants = 33.4%
- Book Stores = 23.7%
- General Gift Card = 23.8%
- Discount Store = 14.7%
- Electronics Stores = 19%
- Entertainment (Movies) = 14.1%
Note: These percentages won't add up to 100% because some shoppers are buying from a variety of stores for different recipients, not just one.
This year, the average budget for decorations will be $41.51 and $16.86 for flowers, for a total of $58.37. If you also purchased a live Christmas tree to decorate your home with, it can cost anywhere from $44 - $79 per tree, which brings the final average for all decorations to be $119.87 this year.
For all those 2 billion greeting cards being sent out across America, the estimated spending will be $26.10, which doesn't include the packages of gifts themselves.
Food and Candy
This year, according to the National Retail Federation, in addition to regular grocery budgets, special holiday-specific treats such as eggnog and candy will come out to $86.32 this holiday season.
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The Holiday Bill
If we add up all of this spending for a single day of the year, these are the numbers in summary:
- Gifts = $688.87
- Decorations = $119.87 (includes flowers, holiday decorations and Christmas Trees)
- Greeting Cards = $26.10
- Food and Candy = $86.32
This brings our total estimated spend for this holiday season to be a whopping $921.16.
Note that the above doesn't include unexpected expenses, holiday vacations or even the cost of transportation to travel back to spend the holidays with loved ones, which can cost a pretty penny. (These tips will have you singing "Joy to the World" well into the New Year. Refer to Holiday Spending Or Spending Holiday?)
The Bottom Line
This holiday season is definitely the season of giving, but we should be careful to not go into debt just for a single day of the year. There's no need to enter a New Year with that dreaded holiday spending hangover, where the bills linger on your credit cards long after the season has passed. So watch your spending this year and remember that spending more money doesn't necessarily mean it'll be a better holiday season.
Find out what happened in financial news this week. Read Water Cooler Finance: Insiders, Door Busters And Debt Contagion.