Many Americans are anxious about holiday finances

The holidays are nearing, but for a large share of Americans, the season feels more financially stressful than festive.

A new Intuit Credit Karma study found that 31% of Americans say they are entering the holidays in a weaker financial position than a year ago. With everyday costs squeezing household budgets, half of respondents say they are more worried about money this holiday season than they were last year, and 61% believe the economy feels like a recession, regardless of the official data.

Americans are responding to that pressure in different ways. More than a third say they may have to skip some traditions because of cost, while others are preparing to tighten their budgets. Nearly one-third feel pushed to spend more than they can afford, including 43% of Gen Z and 44% of millennials. Even with rising concern, a quarter expect to spend more this holiday season than they did last year, rising to 43% among Gen Z.

Key takeaways

• Everyday necessities are squeezing holiday budgets. Groceries are the biggest expense weighing on holiday budgets for Americans (26%), while 47% say higher utility bills will affect how much they can spend.
• Money worries are shaping holiday decisions. Half of Americans say they are more anxious about money this holiday season than last year, and 32% feel pressure to spend more than they can afford.
• Savings and credit are filling the gap. Three in 10 plan to use savings or an emergency fund, and 34% are entering the season with credit card debt. Among younger consumers, 50% of Gen Z and 48% of millennials say buy now, pay later services make it easier to overspend.
• Student debt is forcing hard choices for younger borrowers. About one-third of Gen Z and millennial borrowers say they will reduce or skip a student loan payment to help cover holiday costs.
• Many are trying to plan ahead. About 41% plan to talk honestly with friends and family about what they can afford, while others are cutting discretionary spending or hunting for sales more aggressively.

Everyday expenses leave less room for holiday spending

For many households, higher costs for basic needs are leaving less money available for holiday purchases. Groceries top the list of expenses expected to pressure holiday budgets, and nearly half of Americans say larger utility bills are reducing what they can spend. Higher gas and energy prices are also affecting holiday travel plans for 48% of respondents, including 57% of Gen Z.

Job concerns are also changing spending habits

Uncertainty about employment and income is weighing on holiday plans as well. One-third of Americans say they are worried about job or income security heading into the festive season, including 44% of Gen Z and 38% of millennials.

In response, more than a third say they are spending less overall to stay cautious, 35% are cutting back on gifts and 24% are picking up extra work or a side gig. Younger adults are split in how they are reacting: 32% of Gen Z are taking on extra work, while 26% of millennials say they are relying more on credit or buy now, pay later services.

Student loan payments are creating tough tradeoffs

For younger adults with student debt, monthly payments are adding another hurdle. Nearly a quarter of Gen Z and millennials say they currently have student loan debt, and among those borrowers, 51% of Gen Z and 54% of millennials say their payments make it impossible to afford the holidays this year. More broadly, 55% of Gen Z borrowers and 57% of millennial borrowers say changes to their repayment plans have left them with less money for holiday spending.

Some borrowers are considering choices that could affect their finances beyond the holiday season. About one-third of Gen Z and millennial respondents with student loan debt say they will reduce or skip a student loan payment to make holiday spending possible.

Savings, credit cards and BNPL are helping fund the season

Even with financial pressure, many Americans still expect to spend. A quarter say they anticipate spending up to $1,000, 19% expect to spend up to $2,500, and 10% expect to spend more than $2,500.

To cover those costs, three in 10 say they will use savings or an emergency fund, including 38% of Gen Z and 43% of millennials.

Credit cards are also likely to play a major role, with 53% of Americans planning to use them for holiday expenses. Some younger shoppers also plan to open a new credit card specifically for holiday shopping, including 24% of Gen Z and 19% of millennials.

Many consumers are also heading into the season already in debt. More than a third say they will carry existing credit card balances into the holidays, while 27% of Gen Z and 30% of millennials are still paying off last year’s holiday debt.

For some, the balances are significant. Among those expecting to carry debt into the season, 22% say they will owe up to $2,500, rising to 29% among Gen Z. Meanwhile, 20% of Gen X expect to carry more than $10,000 in debt.

Higher borrowing costs are also shaping behavior. Nearly half say rising rates, including credit card interest, are making them more cautious about holiday spending, and 43% worry about carrying a credit card balance into the new year because rates are higher, including 50% of Gen Z.

Buy now, pay later services remain popular, especially with younger shoppers. While 48% of Gen Z and 45% of millennials say BNPL helps them manage holiday spending, about half in both groups also admit it makes it easier to overspend.

Financial stress and spending can overlap for younger shoppers

Some younger consumers are coping with financial stress by shopping, a behavior often called “doom spending.” That pattern is reported by 16% of Gen Z and 13% of millennials.

Among those who doom spend, nearly three-quarters of Gen Z and 86% of millennials say spending gives them a quick sense of relief when they feel stressed or anxious. Meanwhile, 61% of Gen Z and 71% of millennial doom spenders say they feel so far behind financially that saving no longer seems worthwhile.

Social media adds another layer of temptation. Among younger respondents who say they doom spend, 70% of Gen Z and 77% of millennials say negative news content combined with one-tap shopping makes it easy to spend impulsively.

More broadly, 52% of Gen Z and 43% of millennials say they are likely to buy holiday gifts directly through platforms such as TikTok Shop and Instagram. Of those shoppers, 66% of Gen Z and 76% of millennials say they have bought or plan to buy a gift because it went viral online. The convenience may also encourage overspending, with 64% of Gen Z and 72% of millennials saying buying in just a couple of taps leads them to spend more than intended.

Holiday traditions are being scaled back

As Americans weigh celebration against financial reality, many are adjusting their plans. More than a third say they will skip some holiday traditions because of cost, including 41% of millennials and 40% of Gen X.

Some of the biggest cutbacks involve the social side of the season. More than a quarter say they will skip restaurants and bars during the holidays, 24% are foregoing new clothes for holiday events, and 22% are canceling a holiday vacation.

Travel is another area where budgets are driving decisions. Among those who are not traveling to see family or friends, 30% say they cannot afford it, while 21% cite expensive gas or airfare. Even travelers are trying to save: 25% plan to drive instead of fly, and 22% of Gen Z say they will take a bus or train to avoid high fuel and airfare costs.

Still, some expenses remain nonnegotiable. Nearly one in five say gifts for their children are the one thing they will not cut if they have to make tradeoffs, while 18% of Gen Z say seeing family in person is the priority.

How Americans are managing holiday spending

While many people are willing to cut back on dining out or personal shopping in January in order to spend more during the holidays, some Gen Z consumers are considering moves with longer-term financial consequences. Nearly 1 in 5 say they would reduce their savings contributions, 17% would delay debt repayment, and 16% would cut back on groceries or other essentials to make room for holiday spending.

At the same time, many are taking a more deliberate approach, including cutting discretionary spending, shopping sales more aggressively, or adopting a “no-buy” or “low-buy” mindset for nonessential purchases.

One of the clearest strategies is setting expectations early. About 41% say they plan to have an honest conversation with friends and family about what they can afford this holiday season, rising to 52% among both Gen Z and millennials.

Younger adults are turning to AI for help

Some Americans are also using artificial intelligence to manage holiday costs. Nearly one-third of Gen Z and millennials say they plan to use AI for holiday shopping or budgeting, with brainstorming gift ideas the most common use.

Others want AI to help stretch their budgets, including comparing prices across retailers or finding gifts within a specific price range. Beyond shopping, some plan to use AI to build a holiday budget, track spending or even create a debt paydown strategy.

The survey suggests that for many Americans, holiday financial pressure starts well before the season is in full swing. Between rising everyday costs, existing debt and the pressure to keep up with traditions, people may spend more than they can comfortably afford. Setting priorities, building a realistic budget and being honest about financial limits can help keep holiday memories from becoming new-year debt.

Methodology

This survey was conducted online in the United States by Qualtrics on behalf of Intuit Credit Karma among 1,025 American adults.