Linda @ The Cents of Money
Consumer spending has been strong throughout 2025 despite higher inflation than desired. Some softness has recently appeared, with shoppers spending less on holiday shopping.
Grocery prices haven’t entirely stabilized for items like coffee, ground beef, steaks, and eggs. However, turkey was cheaper in time for this year’s holiday. According to the American Farm Bureau Federation, the average cost of a 16-pound frozen turkey was about $1.34 per pound, down roughly 16% from last year. Gas prices at the pump have continued to decline this year, recently dipping below $3 per gallon for the first time since the pandemic days as crude oil dropped below $60 per barrel. Some believe we may see oil prices in the low $50s per barrel soon.
Consumers may be slowing down and seeking more deals this holiday season. In recent earnings reports from major retailers, including Home Depot, Lowe’s, Bath & Body Works, Burlington, Costco, and Target, results reflected softness. This trend will likely continue, with households spending less on the holidays.
According to the latest Holiday Spending Survey from The Conference Board, the average consumer plans to spend about $990 on holiday-related purchases. This figure represents a 6.9% decrease from $1,063 in 2024 and is close to holiday spending plans from 2023. Consumers are cutting back their spending, with 80% of Americans saying that things are more expensive this year, according to the CNBC/SurveyMonkey 2025 Small Business Survey, reported recently. There is no doubt that tariffs have hurt retailers, many of many of which have passed higher costs to buyers.
As we end the year, reviewing your financial plan to spend wisely, make end-of-year investing decisions, and have fun is an excellent time.
1. Make a Budget For the Holidays
Do you shop more during holidays? Make sure to have a holiday shopping list. Research what you need and see if you can get a deal or promotion on special shopping days. In recent years, there have been many deals throughout the holiday season. Are you hosting a dinner or a party during the holiday season? Make a grocery shopping list early so you can spot deals. Food may be more expensive this season due to inflation.
Plan your gifts early, estimating the cost so you can distribute cash or presents to your family, friends, co-workers, neighbors, and people who help you year-round, including those who do your lawn, handyman, dog walker, and postman.
2. Keep Track Of Your Spending
Track your spending and use your budget to guide you. Try not to go off-script. Search online and add items to your cart to trigger follow-up coupons and discounts on your purchases. The point of tracking spending is to be more conscious about your purchases, to be guilt-free, and enjoy the holidays.
3. Shop Early to Avoid Procrastination
Start shopping early so you aren’t forced to buy in a hurry. When we procrastinate, we spend more as stores get more crowded. Do comparative pricing online to better gauge gift prices this year.
4. Pay Off Credit Card Balances
The holidays are often stressful, especially when we increase our credit card balances, with interest charges averaging 20%.
Based on the latest reports from the Federal Reserve, U.S. credit card balances reached a record $1.23 trillion in the third quarter of 2025, a jump from just over a trillion dollars in 2023. This represents a $24 billion increase from the previous quarter and an approximately 6% rise year-over-year. More alarming, the transition rate into serious delinquency (90 days or more past due) for credit cards was 7.05%. While it is largely stable compared to the previous quarter, it is up from lower rates just two years ago.
If you are using credit cards this season, plan to pay off your balances in full as soon as possible.
5. Use More Cash
If you know you will overspend if you use your credit cards, try using cash. It is a good way to keep track of your money for smaller purchases. You will feel pain more immediately and often be more informed about your purchases.
6. Be A Savvy, Not Impulsive Shopper
The holiday season is a tricky time to shop. Typically, you are not buying things for yourself. Gift shopping is more of a necessity because we are getting something for family and friends. Don’t feel any guilt looking for bargains for others. Merchants are taking advantage of us during this time, with red sale signs that aren’t always bargains. The store is brightly lit, and holiday music is being piped in. That’s marketing psychology at work, making us feel nostalgic and joyous, but it sometimes leads to impulsive shopping. Be more mindful, and stick to your list.
7. Year-End Tax Strategies For Your Portfolio
While your mind may be on the upcoming holiday season, this time of year is a good time to consider how to efficiently structure your capital gains and losses in your portfolio. That means reviewing your portfolio for tax-loss harvesting, which means selling “taxable” investment assets like stocks, mutual funds, and bonds at a loss. The losses of these long-term holdings (i.e., at least a year and a day) can be matched against other holdings that have capital gains in your portfolio, reducing the capital gains taxes you’ll owe. Start now before the year ends to minimize your tax liabilities. Talk to a financial adviser about selling some stocks.
8. Charitable Giving
You might do charity work year-round, whether by volunteering or donating. This time of year, there are a lot of toy, food, and clothing drives collected by your neighborhood centers, churches, or other places of worship. Participate as best you can, or make donations to your favorite charities.