People in these California cities should budget $3,000 max for the holidays, study says
Consumers are still spending more money and getting into credit card debt, but that’s not stopping holiday shopping.
The National Retail Federation estimated holiday spending will grow between 3% and 4% compared to 2022. That would bring spending to record levels between $957.3 billion and $966.6 billion. Households were $9,068 in credit card debt in quarter three of this year, a 12.7% increase from that time last year, according to WalletHub.
A new study from WalletHub found consumers across the country are budgeting a median of $1,152 for the holidays. Just how much they’re planning to drop in the next month varies depending on the city. The study compared 558 U.S. cities based on factors such as income, age and saving-to-expense ratios to estimate the most consumers will spend. Each city was ranked by the maximum holiday budget, which includes holiday celebrations and gifts.
Palo Alto, California, has the highest holiday budget overall, WalletHub found, as well as the highest among small cities. It also has the third highest median annual household income in the country and residents earn nearly twice as much as they pay in expenses.
Residents in seven other cities in California are could spend more than $3,000 on the holidays: Sunnyvale, Milpitas, Mountain View, Fremont, Santa Clara, San Mateo and Union City.
Sacramento ranked 170th on the list with spending of $1,433.
Bellevue, Washington, is the medium-sized city with the highest budget at $3,576 — the second highest among all cities. Residents there can save over three times as much money as they spend in expenses, according to WalletHub.
Among large cities, San Francisco has the highest budget at $2,313 — but it ranks 46th overall.
“Some people can afford to spend much more than others over the holiday season, based on their income, existing debt obligations and cost of living,” WalletHub analyst Cassandra Happe said in a news release. “No matter what your budget is, it’s important to stick to it to make sure the jolliness of the holidays isn’t followed by a mountain of unsustainable debt.”
How can you save?
Here’s what WalletHub’s experts recommend:
Start early: Plan your budget ahead of time. That helps you avoid last-minute pressure and inflated prices. You can also find products during Black Friday or Cyber Monday sales.
Credit card rewards: Many credit cards offer bonuses when you spend a certain amount of money in the first few months that you have the card — but don’t spend more than you can afford to pay in full when the bill is due.
“As with all purchases, avoiding credit card debt is paramount,” said Yao (Henry) Jin, associate professor of supply chain management at Miami University in the news release. “If you have to carry a credit card balance in order to afford something, then it is probably beyond your budget.”
Track spending: You have to know how much you’ve already spent — and what’s left — to stay on track with your budget.
Creative alternatives: Thoughtful but inexpensive gifts, DIY-ing decorations or organizing a potluck can be cost-effective ways to save during the holiday season.
“This year’s holiday season is basically a season of inflation: inflated prices, inflated interest rates, and even inflated return costs as retailers begin to push back against product returns expenses,” Jin said. “The only things that are shrinking are package sizes and people’s bank accounts.”
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This story was originally published November 14, 2023 at 11:59 AM with the headline "People in these California cities should budget $3,000 max for the holidays, study says."
