More than 3 in 4 Americans are stressed about going into debt over the holidays — and technology’s not helping

Woman holding mobile phone and online holiday shopping while laying on bed at nightImage: Woman holding mobile phone and online holiday shopping while laying on bed at night

In a Nutshell

As Americans prepare for the 2018 holiday season, many are worried about keeping their finances on track. A new Credit Karma survey finds social media is influencing purchasing decisions, and leading consumers to spend more than they planned.
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Technology’s making it easier to overspend, and it’s stressing people out, particularly during the holiday season.

In a Credit Karma survey of 1,041 U.S. adults, nearly one in four respondents said they typically go into debt during the holiday season, with 79% of respondents saying they feel stressed out when they do.

Even consumers with holiday budgets in place are tempted to spend beyond their means when they see a good sale during the post-Thanksgiving shopping frenzy. And social media may be one of the reasons. According to the survey, 40% of social media users are more likely around the holidays to buy what they see on their screens, and 42% of Americans think social media’s targeted advertisements have caused people to go into debt.

What makes spending on social media so hard to resist? It’s certainly easier to click a few times to make a purchase from the comfort of your home than it is to go to the store. But our survey results suggest ease of use isn’t the only factor influencing people’s decisions to buy.

Key survey findings

79% of Americans feel stressed when they go into debt around the holidays, and 22% of Americans typically do go into debt during the holidays.
69% of Americans think technology has made it easier for people to go into debt. Specifically, 42% of Americans think the way social media targets specific people with advertisements has caused people to spend beyond their means.
64% of respondents who buy items through social media at least once a year said when they purchase things on social media, it’s typically unplanned. And 82% of those respondents end up regretting their spontaneous social media buys. Millennials in this group were most likely (70%) to say their social media purchases were unplanned, with 86% of millennials experiencing buyer’s remorse after making those spontaneous buys.
40% of social media users say they’re more likely to purchase things they see on social media around the holidays. And younger users are most affected. More than half of millennials (52%) are more likely to purchase things they see on social media during the holidays.
35% of social media users make a social media purchase at least once a month, and almost one in three social media users (30%) has gone into debt to make a purchase online. Of those, 46% have gone more than $300 in debt so far this year to buy something through social media.
54% of Americans who plan to shop on Black Friday/Cyber Monday have a budget, but 63% of them said they’d go over their budget if they found a good sale on an item they wanted, and 45% said they’d go into debt for a good sale on an item they wanted. Millennial respondents were most likely (54%) to say they’d go into debt for a sale on an item they wanted during Black Friday or Cyber Monday.

How does social media influence holiday spending?

There’s no doubt social media entices consumers to spend more than they planned. But our survey also reveals how consumers are being influenced while using social media, and what factors contribute to their buying decisions. Let’s explore some of the most influential factors affecting consumers this holiday season.

Buying for the holidays is just a click away

Social media removes much of the resistance people used to experience when they needed to purchase something. You don’t need to get in your car, drive to the store and stand in line. All you need to do is open your computer, tablet or smartphone and tap a few keys.

While it may be convenient to do your shopping this way, social media may be making it a little too easy to spend money. According to our survey, 31% of social media users say the reason they buy things on social media is because it’s easy. And 35% make a social media purchase at least once a month.

Unfortunately, our results also revealed that 64% of people who make social media purchases said the items they bought were typically impulse-buys, and 82% of those people said they later regretted their unplanned purchases.

The holiday season seems to be a time when consumers are particularly vulnerable to buying items using social media. Our survey results showed 40% of social media users are more likely to purchase things they see on social media around the holidays.

And that’s exactly what advertisers are counting on. According to a Reveal Mobile survey, small and medium businesses plan to spend the majority of their holiday marketing budget on social media marketing this year. So, users should expect to see targeted ad campaigns throughout the holiday season.

‘Everybody’s doing it’

While it’s easy to click on a social media ad and buy something, that’s not the only factor making it difficult for users to resist spending money. Consumers’ ability to see how people they know are spending money is also influencing their spending patterns.

According to our survey, over one in four respondents (28%) said they’re very or extremely likely to purchase a trip or item after seeing their friends post about it. And they’re spending money they don’t have to make these purchases because:

  • They believe owning the item will help them fit in (21%)
  • They’ve seen others with the item they purchased (20%)
  • They don’t want to be judged for not owning the item they purchased (16%)

Unfortunately, making spending decisions based on what other people are doing isn’t financially sound and can put your financial health at risk.

Setting a budget isn’t enough

In the face of so many temptations, it seems like setting a budget would be a good first step to keeping your finances on track during the holidays. But it’s not enough. For a budget to be effective, you have to stick to it, and many people don’t.

In fact, even though more than three-quarters of respondents feel stressed when they go into debt during the holidays, our results show sometimes a good deal is just too hard to resist.

According to our survey, some 54% of Americans who plan to shop on Black Friday or Cyber Monday have a budget. But :

  • 63% of them would go over their budget if they found a good sale on an item they wanted
  • 45% of them would go into debt for a good sale on an item they wanted

And social media may make it more difficult for those who have a budget to stick to it. According to our survey, 69% of Black Friday/Cyber Monday shoppers will make their purchases on their phone or computer, opening up more than two-thirds of shoppers to targeted ads that could influence them to buy. What’s more, a 2015 Deloitte survey, Navigating the New Digital Divide, found consumers who use social media during their shopping process are around four times more likely than non-users to spend more or significantly more on their purchases.


Tips to stop overspending this holiday season

It’s easy to get swept up in the hustle of the holiday season and spend more than you intend. But with a little effort, it’s possible to keep your spending in check. Here’s some advice to help you stick to your budget this year, so you can enjoy the holidays instead of getting stressed out by them.

Make a plan

We know budgeting alone isn’t enough, but that doesn’t mean you should forget about it completely. Take some time to make a list of all your holiday expenses — not just gifts. That might include things like food and drink for parties, decorations, holiday events, and charitable contributions. This will help you decide if your list is realistic or you need to eliminate or cut back on certain expenses, so you have enough money for the things that are most important to you.

Use cash or a debit card

Credit cards make it easy to spend more than you planned. In fact, 63% of our survey respondents who have gone into debt during the holidays used credit cards to fund their purchases. Stick with cash or a debit card instead. Once the money is gone, don’t buy anything else for the holidays until you can pay for it with cash.

Eliminate or limit social media use

The research suggests that even with the best of intentions, it’s easy to overspend when you use social media. If it’s not practical for you to stop using social media altogether, consider limiting your use. The less time you spend on social media, the fewer chances you’ll have to be tempted into buying something you don’t really need or want.


Methodology

On behalf of Credit Karma, Qualtrics conducted an online survey in October 2018 of 1,041 Americans 18 and older to learn about their spending habits during the holidays. Millennial respondents were 18-34 years old. All percentages have been rounded to the nearest whole.


About the author: Jennifer Brozic is a freelance financial services writer with a bachelor’s degree in journalism from the University of Maryland and a master’s degree in communication management from Tow… Read more.