All of us want to save money wherever we can. And during the holidays, many people pay extra attention to how much they’re saving, often employing strategies to prevent overspending. But new research from Elevate’s Center for the New Middle Class shows that some of those strategies might not be working out so well for folks.
Elevate reports that last year, nearly 40 percent of consumers said they spent too much money during the holiday season, despite their efforts to save. The firm surveyed over 1,000 consumers across the United States just after the 2016 holiday season ended, when their memories of what they spent were still recent in their minds.
Jonathan Walker, executive director of Elevate, explained that “consumers often employ strategies to save money during the holidays that actually work against them.” He said looking for bargains makes people “much more likely to spend more than they planned.” Eighty-six percent of survey respondents said they shopped sales to save money, but Walker says it doesn’t tend to work. “It turns out that one of the best ways to ensure overspending is to chase the sales.”
Budgets, coupons, and credit cards versus cash
Many people make a holiday budget to aid them in meeting their spending and savings goals. But those who looked for sales were 45 percent more likely to go over budget. Having a budget, at least, is a good plan: shoppers who didn’t set a budget were 87 percent more likely to overspend than those who did create a budget.
Clipping coupons was also not a great savings strategy. Coupon enthusiasts were 22 percent more likely than other shoppers to spend more than they planned, even when they were working with a budget. Coupon clippers who didn’t have a budget were 76 percent more likely to overspend.
One way people were able to stay within their budgets was to use cash rather than credit cards or debit cards to pay for their purchases. However, using cash isn’t necessarily the wisest choice either, because shoppers miss out on earning rewards points, cash back, and frequent flyer miles that they can earn when shopping. During the holidays, many credit card issuers give up to five percent cash back at department stores and online, which can add up to a nice credit card reward once the holidays are over.