The Mental Health Price of Holiday Overspending

Spending Forecast 2024

As the holiday season approaches, so does the gift-buying season. Gift giving is often seen as an expression of love and appreciation, but it can also introduce financial and mental health challenges as a result. The pressure to find and afford the perfect gift, coupled with social and familial expectations can lead to feelings of stress and anxiety. While gift giving can provide quick and exciting gratification, the implications of the financial and mental burden can last far beyond the festivities.

And holiday overspending isn’t just limited to gift-giving.

“Whether you need to travel long distances to see family, always throw an over-the-top party, or want to spoil your kids, the costs cause many to ring in the New Year with plenty of debt,” said Laura Adams, MBA, a personal finance expert with Finder, in
Yahoo! Finance.

According to an article on the PwC (PricewaterhouseCoopers) website, in 2024, “shoppers plan to spend an average of $1,638 on gifts, travel and entertainment this holiday season, marking a 7% increase from 2023 and a 15% jump from 2022.” And according to
BCG (Boston Consulting Group) website, “just over a quarter of consumers (28%) plan to spend more than they did last year, just over a quarter (27%) plan to spend less—and just under half (45%) plan to spend the same.”

While some are excited by the prospect of giving lots of gifts and spending money on travel or celebrations this holiday season, holiday overspending, going over budget and facing financial strain may have a detrimental impact on mental health.

Why do we overspend for the holidays?

“For most people, there is no budget when it comes to holiday gifts,” money management expert Guadalupe Sanchez of Budgeting in Blue told Yahoo! Finance. “Our mentality is to buy, buy, buy, regardless if we can afford it or not. The thought of paying it off comes after the fact. It’s unfortunate because that’s usually the spending mentality throughout the year, not just around the holidays. It just gets worse during the holidays.”

One of the primary reasons people indulge in holiday overspending is simply expectations. Many ads show lavish gifts – diamond watches, big bows on luxury cars, and vacations to the Caribbean – and people feel the need to “keep up with the Joneses.” This fear of falling short can cause individuals to accumulate debt so that their spouse, children, family and/or friends have a “good” holiday.

Nostalgia is another reason.

Another reason for holiday overspending may be driven by social media. When you see your friend’s matching pjs, huge feasts, and extravagant gifts, it’s easy to feel jealous and feel inadequate. Constant exposure to these seemingly over-the-top holiday experiences may drive you to overspend in an attempt to keep up with your peers. This constant comparison can take a toll on mental health, contributing to feelings of anxiety and depression.

How mental health is impacted by holiday overspending

Once the season is over, the reality of holiday overspending sets in. Holiday overspending can have immediate and long-term financial consequences. Some people may “max out” their credit cards or take out high-interest loans to cover their holiday expenses. That means starting out the year with a pile of debt that may take months – or even years – to repay.

As a result, people are left grappling with the consequences of their financial decisions, and this can lead to a range of negative emotions, from regret and guilt to shame and self-blame. These emotions can significantly impact mental health, leading to increased stress and a decreased sense of well-being.

“There are many reasons why individuals choose to work with a financial therapist, but mental health is ultimately at the root of each,” Lindsay Bryan-Podvin, a biracial (Filipina-white) female social worker-turned-financial therapist, author, speaker, and the first financial therapist in Michigan, told Forbes. “Money and emotions are highly interconnected. In fact, behavioral finance experts agree emotions drive financial decisions between 80–90% of the time.”

Mental and financial health may be intrinsically linked.

“High levels of financial stress manifest through physical symptoms like sleep loss, anxiety, headaches/migraines, compromised immune systems, digestive issues, high blood pressure, muscle tension, heart arrhythmia, depression and a feeling of being overwhelmed,” according to
Purdue University.

“The increased medical expenses that present themselves, as a result, then worsen money challenges,” says Nancy Cook, employee assistance counselor at the Center for Healthy Living (CHL). “Which then, of course, increases their financial stress level. Those caught in this ever-revolving loop of monetary worries and physical and mental issues are in dire need of a support system to help them navigate through and hopefully break the cycle, or at least find a slight detour off of its path.”

Protecting your budget – and your mental health

Creating a plan that best fits your needs and sticking to it is important. Some components may include:

• Set a realistic budget: This means not only budget for gift giving, but for travel and other expenses. You may need to prioritize essential expenses and hold off on some purchases until after the holidays.
• Start planning early: Try to start your gift research and planning ahead of the holiday rush. Create a list for those items you want, and who they are for. Advanced planning allows for time to shop around for the best deals and be intentional with purchases. Pushing the process off to just days before the holiday can not only be mentally exhausting, but can also cause you to make quick decisions that don’t align to your budget or intentions.
• It truly is the thought that counts: Before you shop or buy, think about the reasons you may be making that purchase. Is there something that may be more meaningful? A shared experience or heart-felt letter? For some, rather than material possessions, a gift from the heart may mean more.
• Communicate about your financial constraints. Maybe you lost a job or had unexpected expenditures over the year and your budget isn’t what it used to be. Maybe you are wanting to save for a house or a car. Or maybe you just don’t want to go overboard this year. Regardless of the reason, communicating your plans well in advance may avoid awkwardness during a family gathering. You could suggest a gift exchange or a gift to a favorite charity over material gifts.
• Shut down the social media apps. If seeing your neighbor or high school friend’s over-the-top celebration makes you want to “shop ‘til you drop” put down your phone and indulge in a different holiday activity. Go ice skating, bake cookies, put together a puzzle or read a good book.

With careful planning and being mindful of why and how you spend, financial stress and the impact to your mental health doesn’t have to hit so hard in January.

To read more on this topic, please visit:

• Happy(er) Holidays
• Holiday Depression: Links to Stress & Anxiety
• The Most Wonderful Time of the Year?