Thanks to today's inflationary environment, consumers are buckling down and taking a strategic approach to holiday shopping this year. In fact, according to TD Bank's Merry Money Survey, 57% said they are creating a holiday-specific budget because of inflation and rising prices.
 
The survey found that the economic environment is weighing heavily on the minds of the more than 1,000 Americans polled for the survey, with 74% of respondents saying the financial aspect of the holiday season makes them anxious, compared to 66% who said the same in 2021.
 
"It's important that consumers are in control of their finances, not only during the holiday season, but year-round," said Matt Boss, head of Consumer Products at TD Bank. "The fundamental practice of having and maintaining an accurate budget can help them gain the confidence to maximize their spending goals and behaviors." 
 
According to the survey, 69% of consumers admit they have previously overspent during past holidays, of which 45% said they overspent by $300 or more. The pressure to find the right gift for loved ones (36%) and the impulse to take advantage of holiday sales (26%) topped the list of contributing factors in overspending.
 
Despite past behaviors, over spenders are conscious of their future shopping habits. 92% said they have considered adjusting their future holiday spending habits to avoid overspending, including spending less on gifts, sticking to a budget, gifting to fewer loved ones this year and more.
 
When asked how they intend to pay for holiday purchases, more than four in ten consumers (42%) cited debit cards as their primary payment method, followed by credit cards (33%).
A whopping 76% of those using bank or store credit cards also noted that they do so to earn rewards or cash back on their spending. When it comes to paying off holiday bills, nearly two-thirds of respondents who use credit cards or personal loans for holiday spending expect to pay 100% of their outstanding balance in January 2023.
 
"All financial situations require unique approaches that strike the right balance between saving and spending," said Boss. "For example, for those consumers who might be looking to take advantage of incentives and cash back for their holiday purchases, you might elect to use rewards or store credit cards. No matter how you choose to spend, it's more important to spend within your means and have a plan to responsibly manage those expenses."
 
Beyond the holidays, shoppers are also prioritizing and setting themselves up for success in 2023, including:

• 90% said they review their spending throughout the holiday season, and nearly half of respondents (46%) said they do it every time they make a purchase.
• 53% of consumers said they set aside cash throughout the year for holiday spending by stashing money in a separate jar, utilizing a separate bank account or saving gift cards and reward points for use during the holidays.

Family is the top source for financial advice (30%) during the holiday season, with friends following closely at 20%. 14% of consumers look to online resources and tutorials.