BMO Survey: More Than a Quarter of Americans Plan to Cut Back Spending in 2025
PR Newswire
6 min read
72% of Americans say they are purchasing fewer gifts this year, with nearly half (47%) prioritizing daily expenses over holiday travel.
Americans who make financial New Year's resolutions are changing their plans due to rising costs.
CHICAGO, Dec. 17, 2024 /PRNewswire/ - The BMO Real Financial Progress Index reveals that concern over the rising cost of living has many Americans planning to minimize spending in 2025 and reprioritizing their spending this upcoming holiday season.
Although the average American expects to spend $550 on gifts over the holidays, many think this expense will not go as far as in previous years. In total, 72% of Americans say they will have fewer gifts to give this year, with 37% making the decision to buy fewer presents to save money and 35% saying their same holiday budget from previous seasons will not stretch as far.
"The holiday season is a time to reconnect with loved ones and celebrate the end of a year, but understandably many are stressed about how to balance holiday expenses with rising everyday costs," said Paul Dilda, Head of Consumer Strategy, BMO. "For those feeling the financial anxiety this winter, making a clear plan to track spending across the holidays and establishing a manageable budget for the new year can help ensure that you stay on track to make real financial progress."
The holidays come as many Americans are feeling more anxious about their overall daily expenses. Over the last quarter of 2024, 57% of Americans reported becoming increasingly concerned about the cost of living.
"The cost-of-living battle has been two steps forward, one step back with Americans experiencing a much-needed gain in disposable personal income in the fall just to be met with an uptick in inflation over that same period." said Scott Anderson, Chief U.S. Economist, BMO. "Yet many are still willing to pay for festive cheer even while feeling anxious about the cost of living, driving some overall holiday spending growth."
The Rising Costs That Stole the Holidays? Over half (53%) of Americans say they feel financial stress over their holiday spending. American parents in particular are concerned about spending this winter, with two in three (67%) Americans with children in their household reporting anxiety over the cost of the holidays.
35% of parents with children in the household will need at least four months to pay off their holiday debt, and quarter of all Americans will still be paying off holiday gifts when March 2025 rolls around.
With these concerns in mind, many are changing their holiday plans to cope with rising costs. In addition to purchasing fewer gifts for loved ones, Americans are traveling less. In fact, one third of respondents say they have not been able to save enough to book a holiday vacation or travel to see loved ones this year, and 47% of Americans are prioritizing daily living expenses over travel costs.
New Year, New Plans for Financial Progress To manage their concerns over increasing costs, many Americans are adjusting their financial New Year's resolutions. More than a quarter (28%) say that they plan to minimize spending in 2025.
"The New Year is the perfect time for anyone who is concerned about their finances to chart a path to real financial progress," Dilda added. "Rising costs can feel overwhelming, but taking simple steps throughout the year can help you feel further ahead and better prepared when the next holiday season rolls around."
Although only 25% of Americans plan to build a budget as part of their 2025 New Year's resolutions, turning over your calendar is the perfect opportunity to set new financial goals. BMO offers the following tips and resources to maintain a plan for real financial progress:
Create a budget before the ball drops and revisit it throughout the year. Build a budget and regularly review spending and financial statements, at least once a month. Consider developing a separate budget for more expensive plans, which can help you get ahead of holiday stress next year. To build a 2025 budget, BMO customers can take advantage of the BMO Real Financial Progress Hub, a digital resource that allows customers to easily access personal finance advice and guidance, as well as tools and resources to reach their own specific financial goals.
Don't lose track of recurring expenses during holiday festivities: Look for recurring "hidden" expenses, such as forgotten subscriptions, and cancel those no longer needed or in use. To help customers keep track of spending, BMO Total Look manages all of your BMO and non-BMO financial information – from bank accounts to credit cards, mortgages to loans, and investments – all in one secure location.
Cash in on rewards in the new year: Consider redeeming points from rewards programs or loyalty programs to help purchase gifts and/or finance travel costs. Closely monitoring your credit and credit card rewards can help support your financial plans. With BMO CreditView, customers can quickly and easily check their credit scores and access new tools and advice to manage their credit profile online and on mobile.
Get a hand from Santa's helpers (financial advisors): Seek advice from a financial advisor or planner to help develop a personalized financial plan according to financial goals, circumstances, obligations, and time horizons.
Set goals to make next season even brighter: Set up a savings goal and recurring savings transfers into an account – no matter the amount – which will provide a sense of progress and motivation to achieve their savings goals. The BMO Savings Builder Account helps make saving easy and automatic, offering no monthly fees, a competitive interest rate, and unlimited no-fee transfers to other BMO accounts. In addition, its digital Savings Goals feature enables customers to set, track, and manage their financial goals.
To learn more about how BMO can help customers make financial progress, visit https://www.bmo.com/us.
About the BMO Real Financial Progress Index Launched in February 2021, the BMO Real Financial Progress Index is an indicator of how consumers feel about their personal finances and whether they are making financial progress. The survey aims to spark dialogue that will help consumers reach their financial goals and to humanize a topic that causes anxiety for many – money.
The research detailed in this document was conducted by Ipsos in the U.S. from August 29th to September 14, 2024. A sample of n=3,401 adults ages 18+ in the U.S. were collected via the Ipsos panel. Quotas and weighting were used to ensure the sample's composition reflects that of the American population according to census parameters. This survey has a credibility interval of +/- 2.4 per cent 19 times out of 20, of what the results would have been had all American adults 18+ been surveyed.
About BMO Financial Group BMO Financial Group is the eighth largest bank in North America by assets, with total assets of $1.41 trillion as of October 31, 2024. Serving customers for 200 years and counting, BMO is a diverse team of highly engaged employees providing a broad range of personal and commercial banking, wealth management, global markets and investment banking products and services to 13 million customers across Canada, the United States, and in select markets globally. Driven by a single purpose, to Boldly Grow the Good in business and life, BMO is committed to driving positive change in the world, and making progress for a thriving economy, sustainable future, and inclusive society.
