While a vaccine is on the way, the economic damage caused by the coronavirus pandemic is going to linger for some time. In a positive sign, the national unemployment rate dropped to 6.7% in November. That’s down from over 14% in April, but it’s still 3.2% higher than it was in February, before the pandemic took off.
With so many more people out of work and with overall economic anxiety still running pretty high, you’d expect that holiday spending might take a step back in 2020. After all, even if you’ve managed to make it through the summer financially unscathed, it’s hard to feel completely confident that things won’t get worse before they get better.
Holiday spending likely to increase
But, according to a survey from Power Reviews, most consumers are pressing forward with their usual holiday spending. In fact, one in five consumers are actually planning to spend more this year than they did last year. And those that are increasing their spending are planning on raising it by a fairly significant amount: they plan on spending about 33% more than they did last year.
Of course, how we spend will be a bit different. Shoppers – for a variety of reasons, safety among them – will likely to be shopping online more than ever before. More also plan to take advantage of delivery and curbside pick-up options, too. But any way you slice it, spending will remain high.
Should the pandemic change your approach to the holidays?
COVID-19 cases are still dangerously high, and will likely remain that way through the winter. While it would be prudent to be cautious with your money right now, it’s totally understandable if you find yourself investing more in gifts and holiday fun than you have in the past. Look – it’s been a lousy year! Putting your money and your energy into the happiest holiday you can manage makes sense.
There’s also the very real possibility that if you’ve been working throughout the pandemic, you simply have more money than you normally would at this time of year. No vacations. Less dining out. More time at home with your movies and board games. All of it adds up to more money left over.
Just keep your bases covered
You don’t need to feel bad about spending more money, but you should strive to make sure you’re prepared in the event things do take a turn.
Specifically, you shouldn’t lose sight of your debt and your savings throughout all this spending. If you’re borrowing money or deferring debt payments to finance your holidays, that could become a major problem sooner rather than later. And if you don’t have enough saved for a potential emergency (like a temporary loss of income), then you need to consider prioritizing building your savings over spending more for the holidays.
If you’re not really sure what you can afford or if your debts are in good shape, you should absolutely take the time to connect with a free, nonprofit credit counselor. Credit counseling is an excellent first stop for anyone unsure if they could be doing “better” (you know – less debt, more savings, less worrying). Get started today and head into the holidays feeling good about your finances!