New Intuit Credit Karma study finds Americans are dipping into savings, leaning on credit and scaling back holiday traditions, while financial anxiety and social media are influencing how younger people spend.
Key takeaways:
- Everyday necessities are eating into holiday budgets. Groceries top the list of expenses Americans expect to put the most pressure on their holiday budgets (26%), while 47% say higher utility bills will impact what they are able to spend.
- Financial anxiety is impacting holiday spending decisions. Half of Americans (50%) are more worried about money this holiday season compared to last year, and 32% feel pressure to spend more than they can afford to.
- People are leaning on savings and credit to cover holiday costs. Three in 10 (30%) plan to dip into savings or an emergency fund, while 34% are entering the season with existing credit card debt. Among younger consumers, 50% of Gen Z and 48% of millennials say BNPL services make it easier to overspend during the holidays.
- Student loan debt is forcing difficult tradeoffs for young borrowers. Roughly one-third of Gen Z (33%) and millennial (34%) borrowers say they’ll reduce or skip a student loan payment to cover holiday costs.
- Americans are taking proactive steps to manage holiday spending. Roughly four in 10 (41%) plan to have an honest conversation with friends and family about what they can afford this holiday season. Others are cutting back on discretionary spending (29%) and shopping sales more aggressively (28%).
The holidays are fast approaching, but for many Americans, their financial outlook is looking less merry than it did a year ago.
According to a new study from Intuit Credit Karma, nearly a third of Americans (31%) say they’re heading into the holiday season in a worse financial position than they were last year. With everyday expenses stretching household budgets, half (50%) say they’re more worried about money this holiday season than they were last year, and 61% of people say it feels like the economy is in a recession, regardless of what the official numbers say.
As financial pressures mount, Americans appear divided in how they’re approaching the holidays. More than a third (35%) say they’ll have to skip some holiday traditions because of costs, while others are preparing to stretch their budgets. Nearly a third (32%) say they feel pressure to spend more than they can afford during the holiday season, including 43% of Gen Z and 44% of millennials. And despite growing concerns about money, a quarter (25%) expect to spend more this holiday season than they did last year, climbing to 43% of Gen Z.
Everyday expenses leave less room for holiday spending
For many Americans, the rising cost of everyday necessities is leaving less room in their holiday budgets. Groceries top the list of expenses Americans expect to put the most pressure on their holiday budget (26%), while nearly half (47%) say higher utility bills are cutting into what they can spend on the holidays. Rising gas and energy prices are also affecting holiday travel plans for 48% of people, rising to 57% among Gen Z.
Job insecurity prompts some to rethink holiday spending
Uncertainty around employment and income is also weighing on holiday spending decisions. One-third of Americans (33%) say they’re concerned about their job or income security heading into the festive season, including 44% of Gen Z and 38% of millennials.
As a result, more than a third (38%) say they’re spending less overall to play it safe, while 35% are cutting back on gifts and 24% are picking up extra work or a side gig. Younger generations are divided on how they’re responding to this uncertainty, with 32% of Gen Z taking on extra work, while 26% of millennials say they’re leaning more on credit or buy now, pay later services to get through the season.
Student loan payments are forcing difficult tradeoffs
For younger Americans carrying student loan debt, monthly payments are creating another obstacle. Nearly a quarter of Gen Z (23%) and millennials (24%) say they currently have student loan debt, and among them, 51% of Gen Z and 54% of millennials say their payments are making it impossible to afford the holidays this year. In general, more than half of borrowers in both generations (55% of Gen Z and 57% of millennials) say changes to their student loan payments or repayment plans have left them with less money for holiday spending.
Some borrowers are considering tradeoffs that could have consequences well beyond the holiday season. Among Gen Z and millennial respondents with student loan debt, roughly one-third (33% and 34%, respectively) say they’ll reduce or skip a student loan payment to afford the holidays.
Americans are dipping into savings and leaning on credit to cover holiday costs
Despite financial concerns, many people are finding ways to make the holidays happen, even if it means stretching their finances further. This holiday season, a quarter of Americans (25%) anticipate spending up to $1,000, 19% (23% of millennials) expect to spend up to $2,500 and 10% expect to spend more than $2,500.
To cover costs, three in 10 people (30%) say they’ll dip into savings or an emergency fund to cover holiday costs, including 38% of Gen Z and 43% of millennials.
Credit cards are also expected to play a significant role, with 53% of Americans planning to use them to cover holiday expenses. Some younger consumers are also planning to open a new credit card specifically for holiday shopping, including 24% of Gen Z and 19% of millennials.
This comes on top of the fact that some consumers are entering the holiday season in the red. More than a third (34%) say they’ll carry existing credit card debt into the holidays, while 27% of Gen Z and 30% of millennials are still paying off debt from last year’s holiday season.
For some, those existing financial obligations are substantial. Among respondents who expect to carry debt into the holiday season, 22% anticipate owing up to $2,500, climbing to 29% of Gen Z. Meanwhile, 20% of Gen X expect to carry more than $10,000 in debt.
The prospect of adding to those balances is weighing on consumers. Nearly half (45%; 55% of Gen Z) say higher borrowing costs, including credit card interest rates, are making them more cautious about holiday spending, and 43% are worried about carrying a credit card balance into the new year now that interest rates are higher, including 50% of Gen Z.
Buy now, pay later (BNPL) services are also part of the holiday spending equation, particularly for younger shoppers. While 48% of Gen Z and 45% of millennials say BNPL makes it easier to manage their holiday spending, roughly half of Gen Z and millennials (50% and 48%, respectively) acknowledge that these services make it easier to overspend during the holidays.
For some younger shoppers, financial stress and spending go hand in hand
While many people are looking for ways to rein in their spending, some younger consumers are turning to shopping as a way to cope with financial stress. This behavior, often referred to as “doom spending” is practiced among 16% of Gen Z and 13% of millennials.
Among those engaging in doom spending, nearly three-quarters of Gen Z (73%) and 86% of millennials say spending gives them a quick sense of relief when they’re feeling stressed or anxious. Meanwhile, 61% of Gen Z and 71% of millennial doom spenders say they feel so far behind financially that saving doesn’t feel worth it.
Social media also adds to the temptation to spend. Among younger respondents who report doom spending, 70% of Gen Z and 77% of millennials say the combination of negative news content and one-tap shopping makes it easy to spend impulsively.
More broadly speaking, 52% of Gen Z and 43% of millennials say they’re likely to buy holiday gifts directly through social media platforms such as TikTok Shop and Instagram. Among those, 66% of Gen Z and 76% of millennials say they’ve purchased or plan to purchase a gift because they saw it go viral online. And the ease of shopping through these platforms may come at a cost, with 64% of Gen Z and 72% of millennials saying the ability to make purchases in just a couple of taps leads them to spend more than intended.
Holiday traditions are getting a budget makeover
As Americans weigh the cost of celebrating against their financial realities, many are making changes to their holiday plans. More than a third (35%) say they’ll have to skip some holiday traditions because of cost, including 41% of millennials and 40% of Gen X.
Some of the biggest cutbacks are happening around the social aspects of the season. More than a quarter (28%) say they’re skipping restaurants and bars during the holidays because of the cost, while 24% are forgoing new clothes for holiday events and 22% are canceling a holiday vacation.
Travel is another area where people are rethinking their plans. Among those who aren’t traveling to see family or friends this holiday season, 30% say it’s because they can’t afford it, while 21% cite expensive gas or airfare. Even those who are making the trip are looking to save. Among holiday travelers, 25% plan to drive instead of fly and 22% of Gen Z are taking a bus or train to avoid both high gas prices and airfare.
Still, there are holiday expenses people aren’t willing to give up. Nearly one in five (19%) say gifts for their children are the one thing they refuse to cut if they have to make tradeoffs, while 18% of Gen Z are prioritizing travel to see their family.
How Americans are managing holiday spending
While many Americans are willing to cut back on dining out (37%) or shopping for themselves (33%) in January to spend more during the holidays, some Gen Z consumers are considering sacrifices that could have longer-term financial implications. Nearly one in five Gen Zers (18%) say they’d reduce their savings contributions, while 17% would put off paying down debt and 16% would cut back on groceries or other essentials to accommodate holiday spending.
At the same time, many people are taking a more deliberate approach to managing their holiday expenses, whether that’s cutting back on discretionary spending (29%), shopping sales more aggressively (28%) or embracing spending trends centered around buying less, with 21% adopting a “no-buy” or “low-buy” approach to nonessential purchases.
Perhaps most notably, Americans are setting affordability expectations ahead of time. Roughly four in 10 (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 Americans are turning to AI for holiday shopping and budgeting
As Americans look for ways to manage holiday costs, some are turning to artificial intelligence (AI) for help. Nearly one-third of both Gen Z and millennials (32%) plan to use AI to help with holiday shopping or budgeting, with brainstorming gift ideas being the most popular use case (28% of Gen Z and 32% of millennials). Others are using the technology to stretch their holiday budgets, with 24% of Gen Z and 32% of millennials planning to compare prices across retailers, while 21% and 31% respectively plan to find gifts within a specific budget.
Beyond shopping, 22% of both Gen Z and millennials plan to use AI to create a holiday budget, while 25% and 28%, respectively, plan to track their spending. Some are even looking to AI for longer-term financial planning, including 18% of millennials who plan to use it to build a debt paydown strategy.
“The holidays are a time to celebrate with friends and family, but for many Americans, the financial pressure is starting well before the season even begins,” said Courtney Alev, consumer financial advocate at Intuit Credit Karma. “Between the cost of everyday necessities, existing debt and the pressure to keep up with holiday traditions, it’s easy to see how people end up spending more than they can comfortably afford. My advice is to decide what matters most to you this holiday season, set a realistic budget around those priorities and be upfront about your financial limits. The memories you make during the holidays shouldn’t come at the expense of your financial wellbeing in the new year.”
Methodology
This survey was conducted online within the United States by Qualtrics on behalf of Intuit Credit Karma between September 27, 2026 and October 2, 2026, among 1,025 American adults.