SAN ANTONIO - (Business Wire) Under the shadow of a still-sluggish economy, many holiday shoppers are embracing healthier money management habits to help keep debt at bay, according to a new survey of 1,000 U.S. adults by USAA. In addition, this back-to-basics approach appears to have many shoppers feeling optimistic about this year’s holiday shopping with nearly half (48 percent) of survey respondents saying that the movie titles “It’s a Wonderful Life” and “Jingle All The Way” best describe their approach to this year’s holiday budget. While the National Retail Federation (NRF) predicts a one percent drop in overall retail sales over the holidays, the positive outlook of many survey respondents may be linked to their plans to avoid debt by using cash instead. According to the survey:
- The majority (85 percent) of respondents plan to use cash to make holiday purchases this year.
- Two-thirds (62 percent) plan to use more cash than last year.
- More than half (56 percent) of the consumers who plan to use cash for holiday purchases have been saving either diligently or a little here and there throughout the year.
At the same time, many shoppers appear to be leaving their credit cards at home with more than half (55 percent) of respondents planning to not charge holiday purchases this year. Even among those shoppers who will use credit, the majority do not plan to pay interest on their purchases:
- 74 percent of those who will use a credit card to make holiday purchases plan to pay off the balance immediately.
- One in five (20 percent) say they will pay off the balance in a few months.
- Just seven percent say they will pay the minimum balance.
Most (64 percent) shoppers surveyed also plan to continue their tradition of typically creating a holiday shopping budget, and many (56 percent) plan to stick to it. One in ten (10 percent) respondents who don’t typically create a budget will create one this year to better manage their money.
“Saving money in advance, creating a budget and using cash instead of credit is the recipe for success when it comes to holiday spending because it helps you avoid debt,” said Joseph Montanaro, a CERTIFIED FINANCIAL PLANNER™ with USAA. “The survey results highlight one of the key lessons of the recession, which is that reducing debt puts you on the road toward financial stability.”
However, some respondents are less sure about their ability to put healthy spending habits into place this year. More than one third (38 percent) of respondents said the movie titles “Surviving Christmas” and “Mixed Nuts” best described their holiday budget. In addition:
- Fifteen percent of respondents plan to charge more on their credit card than last year when making holiday purchases.
- Nearly one in five (19 percent) are not sure as to how they will pay for their holiday purchases.
- More than one in five (22 percent) of those who plan to use cash to pay for holiday purchases haven’t saved any money in advance.
- Nearly one-third (28 percent) of those who typically develop a holiday shopping budget spend more than they budgeted.
“The good news is that it’s not too late to put a realistic holiday spending plan in place,” said Montanaro. “While cutting back may be difficult, the best gift you can give yourself is not piling on more debt. Keep in mind that it would take more than five years to pay off $500 on a high-interest credit card by only paying the minimums each month.”
With respondents choosing paying off holiday debt as their least favorite holiday activity, Montanaro encourages holiday shoppers to “stay focused on the spirit of the holidays instead of overspending.”
USAA, a diversified financial services group of companies, is among the leading providers of financial planning, insurance, investments, and banking products to members of the U.S. military and their families. For the past three years, BusinessWeek magazine ranked USAA among the top two “Customer Service Champs,” highlighting our legendary commitment of providing highly competitive financial products for 7.2 million members. For more information about USAA, or to learn more about membership, visit usaa.com.
This survey was commissioned by USAA to provide information on consumer spending and budgeting habits for the 2009 holiday season. Opinion Research Corporation (ORC) conducted telephone interviews during the period of October 9-11, 2009, with 1,005 adults in a random sample of households (one interview per household). ORC weighted the survey results by four demographic characteristics: age, sex, geographic region and race to ensure reliable and accurate representation of the total U.S. population 18 years of age or older. The raw data are weighted by a custom-designed program which automatically develops a weighting factor for each respondent. This report is based on a weighted total sample of 1,000 respondents. The sampling error associated with a sample size of 1,000 is no more than plus/minus 3.1 percentage points at a 95 percent confidence level.
JJ Montanaro is a CERTIFIED FINANCIAL PLANNER™ practitioner with USAA Financial Planning Services, one of the USAA family of companies.
USAA Financial Planning Services® refers to financial planning services and financial advice provided by USAA Financial Planning Services Insurance Agency, Inc. (known as USAA Financial Insurance Agency in California), a registered investment adviser and insurance agency and its wholly owned subsidiary, USAA Financial Advisors, Inc., a registered broker dealer.
Certified Financial Planner Board of Standards, Inc. owns the certification marks CFP® and CERTIFIED FINANCIAL PLANNER™ in the United States, which it awards to individuals who successfully complete CFP Board's initial and ongoing certification requirements.
| The ABC’s of Holiday Shopping |
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| 1. | | Accumulate: Holiday shoppers plan to spend an average of $682.74 this year according to the NRF, so it’s wise to save in advance for this big annual expense. Open a separate no-fee savings account to track savings throughout the year. If you haven’t saved in advance this year, start in 2010. |
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| 2. | | Budget: Reduce spur-of-the-moment buying – including for yourself – by writing down what you plan to buy for the holidays and setting a limit for each item. Then stick to it. |
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| 3. | | Cash: Plan ahead to withdraw money from the bank, and use cash for holiday purchases to prevent overspending. This strategy works best if credit cards are left at home. |
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for USAA
Kristy Wilson, 770-714-9733
kristy.wilson@fleishman.com
