Many millennials aren’t feeling like being cautious with their finances this holiday season.
Let’s be honest: Being a millennial is no bed of roses. Chronically burned-out, with two major economic crises behind us still affecting our financial situation, we’re perpetually weary and prone to dark humor to help ourselves cope.
Studies say we seek experiences over possessions. We say we’re just trying to feel something.
Jokes aside, the latter can be proved statistically. The season to be jolly is upon us, and millennials are willing to go all in to make themselves and everyone they care about happy. And we don’t mind going into debt for it.
Here are the concerning findings.
This holiday season, millennials are…
Millennials are most willing to go into debt this holiday season
After all the economic turmoil millennials have been through, one would think they’d be cautious with their money.
Not necessarily. In June, we found that most millennials didn’t mind going into debt to celebrate the end of the pandemic.
Now, they feel the same way about the holiday season.
CreditCards.com’s new survey has shown that millennials who celebrate the winter holidays are most willing to go into debt as a result (56%), compared to other generations, for all reasons: to keep their kids (21%) or significant other (21%) happy, to bring joy to their friends and family members (27%) – and mostly, just to feel it themselves (29%).
Millennials are most likely to spend more in 2021 than last year
Millennials (18%) are most likely of all generations to spend more this year than they did in 2020 on overall holiday spending, followed by Gen Z at 15%.
The main category where millennials plan to spend more in is, predictably, travel, with 16% of millennials expecting to increase their travel spending this holiday season. Notably, 16% of Gen Z are also looking to spend more on trips this winter.
Looks like young people can’t wait to venture out as much as they can now that the pandemic is subsiding. I understand this sentiment – I’ve gone on four trips myself in the last five months – but it’s also important to budget for these expenses accordingly. Winter holidays tend to be an expensive time, and added costs of traveling can make for an unpleasant financial situation.
To be fair to my fellow millennials, most of them (43%) plan to spend the same as they did in 2020 this holiday season. Still, the fact that millennials are statistically more prone to increasing their spend for all kinds of celebrations shows that there’s a risk of making poor financial decisions in favor of positive emotions.
Millennials are not universally interested in money-saving tactics
One out of four millennials refuse to even look for opportunities to save this holiday season.
There are many tactics that can make budgeting for holidays easier, such as re-gifting, limiting gift exchanges to immediate family members, giving homemade gifts, seeking out coupons and sales, buying used items, skipping gifting altogether and others.
Twenty-five percent of millennials are interested in none of that.
Truth be told, this seems to be the trend for each generation. Millennials are trailed closely by Gen Z (24%), Gen X (23%) and baby boomers (22%).
On a positive note, millennials and Gen X are also most likely to actively search for deals with 44% of respondents from each of these generations planning to hunt coupons and deals this holiday season.
Millennials plan to spend more on their loved ones than other generations
Millennials are their own Santa Clauses this year and going all in on gifts.
Millennials with a spouse or significant other plan to spend more on them ($262 on average) than Gen X ($229) and boomers ($234). Moreover, only 9% of millennials with a spouse or significant other say they won’t spend any money on them, compared to 16% of Gen X and 20% of boomers.
Additionally, millennials with children under the age of 18 plan to spend around $326 per child on average this holiday season. That’s rather generous, especially when compared to Gen X who only plan to spend an average of $248 on each of their children under 18.
As you can see, expenses can add up rather quickly when you’re trying to spread the cheer to your loved ones by buying them gifts. According to these numbers, the typical millennial couple with two kids under 18 will plan to spend $1,178 on gifts among just the four of them. That doesn’t include any money the children will spend if they’re buying gifts too.
That doesn’t seem to scare millennials. In fact, many are willing to get creative in their ways to get into debt to make that happen.
Millennials are more likely to use buy now, pay later services for most of their holiday shopping
It’s no secret: Young people love “buy now, pay later” services, such as Klarna, Affirm, Afterpay and others.
See related:‘Buy now, pay later’ explodes in popularity
It’s especially apparent during holidays. Our September poll found that 9% of Gen Z and 8% of millennial shoppers plan to make most of their holiday purchases this year using a buy now, pay later service. To put this into perspective, only 4% of Gen X and 1% of baby boomers are doing the same.
It’s easy to see the appeal. Such services allow customers to purchase items they may not be able to afford and pay in installments. Some services don’t even charge interest.
Paying in installments may make the purchase sound cheaper. In reality, of course, it’s purely psychological – a loan is a loan, and the borrower has to pay it off, with or without interest. Just like any kind of debt, it requires caution and a realistic repayment plan for the buyer to avoid unpleasant financial consequences.
Holidays ahead: Proceed with caution
I understand the struggles of my generation and the desire to allow yourself to feel good and make the merriness happen. You deserve it.
At the same time, these recent findings worry me.
Debt is almost always something to avoid. It hurts your financial situation and causes stress and anxiety. You may have a wonderful Christmas vacation and not spare any expense on gifts for your favorite people, but will this result in a financial hangover in the months to come?
Instead, splurge strategically. Set up a holiday budget, and if you do decide to go into debt, only do so with a 0% APR credit card to avoid interest, and a solid repayment plan to avoid headache.
Go with Secret Santa when it comes to larger family, friend groups and coworkers. If you end up avoiding debt (I’m cheering for you!), use a rewards credit card to earn yourself cash back or points on holiday shopping. Just don’t carry a balance, otherwise it will eat into your rewards.
My personal favorite is the Discover it® Cash Back because it usually earns 5% back on Amazon.com purchases in the fourth quarter of the year after activation (on up to $1,500 in combined purchases in the rotating quarterly bonus categories, 1% thereafter) – perfect for holiday shopping. This year is no exception, so I’m planning to use my Discover it Cash Back for gift purchases.
Keep looking for deals and don’t forget to compare prices. I use Honey, a handy browser extension comparing prices from various websites across the web. It also shows price history to help you determine whether you’re getting a good deal.
Millennials once again are proving to be willing to go into debt to celebrate – this time, they’re going all in on holiday spending.
To avoid dealing with debt in 2022, try to find options that will allow you to avoid borrowing in the name of the holiday cheer. There are many ways to celebrate and make your loved ones happy, and plenty of them don’t include putting your budget in jeopardy.