How You Are 'Wired' to Overspend at the Holidays

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The holiday season is among us and many people are rushing around trying to find the perfect gift or just the right food options for their feasts. Before you head out to go shopping, it’s important to know the psychology behind shopping at this time of year. You are “wired” to overspend. Having a decent knowledge of what that is can help prevent you from going over budget and wrecking your 2025 financial goals. Here is what you need to know, plus some solid ways to stop yourself from overspending this year.

Priorities Shift During the Holidays

A NerdWallet poll found that 83% of Americans plan to buy gifts for their friends and family this year. What’s more, is that they plan to spend about $1,014 doing so. That’s a touch more than last year’s $923. However, that isn’t even the most shocking part.

People seem to let go of any long-term goals and even their priorities at this time of year. About 10% of shoppers are planning to pull from their emergency fund to cover the cost of presents. Another 9% said they are planning to put off paying other bills to buy things for the holidays.

Another survey found that nearly half of all shoppers plan to cover their expenses with credit cards or loans. Twenty-eight percent of shoppers are still paying off credit card debt from last year’s purchases.

You Are ‘Wired’ to Overspend

Brad Klontz is a psychologist, certified financial planner, and behavioral finance expert who spoke about how people are technically “wired” to be consumers. “For 99% of our time on Earth, thinking about the long-term future hasn’t served us very well,” Klontz said. “Meeting our immediate needs was what it was all about.”

So, the short-term rush from giving gifts or making holiday purchases outweighs long-term goals for many people. “We can overspend because our long-term goals are much more abstract, and it actually requires us to do extra levels of cognitive processing to delay instant gratification,” Klontz continued.

Andrea Woroch, a consumer finance expert, also pointed out that people might feel pressure to overspend at the holidays. You don’t want to appear cheap or like you don’t care. Not to mention, stores have all of these enticing “sales” right now that push you to feel like you need to buy, buy, buy.

So, what can you do to overcome being “wired” to overspend?

How to Avoid Overspending at the Holidays

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There are plenty of things you can do to avoid overspending during this time of year. Thankfully, many of them are easy to implement. You’ll be able to spread more joy and cheer knowing that you won’t be scraping by to pay your bills come the first of the month. Here are some quick tips from experts to help you.

1. Develop a spending plan.

The first thing you need to do, if you haven’t already, is develop a spending plan. Know what your budget is going to be going in. If you have a limit that you want to spend per person or an overall limit you have in mind, stick to it. It’s also a good idea to have gift ideas already in mind. Something my wife does is create Amazon lists for everyone close to us throughout the year. That way, when a birthday or something comes up, there is already a list there with a wide range of things they might like at different price points. This also allows you to keep an eye on things for when they go on sale.

2. Consider other expenses beyond gifts.

Many people make the mistake of not factoring in other expenses around the holidays. For instance, you might buy new decor or you may have to purchase food for a family dinner. You might even want to plan an outing with your family that may cost a little extra. Whatever the additional expenses are, they need to be factored into your spending plan.

3. Make your expectations known.

Setting expectations with friends and family for gift-giving can also keep you from overspending. If you’d rather just focus on getting gifts for the kids, say that. Let them know that you don’t expect any gifts and don’t plan to exchange presents between adults. Similarly, if you would like to introduce a spending cap for gifts, make it known that you only want to spend $25 on gifts this year. This will help you control costs and also prevent you from looking “cheap” in front of your loved ones.

4. Tap into rewards to offset other costs.

Rewards points can be a life-saver at this time of year. Look for ways to use your rewards to your advantage. This can help you offset your spending by providing you with some money back.

5. Take time to reflect on your long-term goals.

Taking some time to reflect on your long-term goals can make you focus on the bigger picture. This is one single holiday season in your life. It shouldn’t ruin any of your long-term financial plans. You might even consider sitting down and writing out your financial goals for 2025. Thinking about the future can help pull you out of the present and make you less likely to overspend.

There is a lot of pressure on everyone around the holidays. Unfortunately, it leads to many people overspending, but with this knowledge, you can make the necessary changes to improve your holiday spending.

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Drew Blankenship

Drew Blankenship is a former Porsche technician who writes and develops content full-time. He lives in North Carolina, where he enjoys spending time with his wife and two children. While Drew no longer gets his hands dirty modifying Porsches, he still loves motorsport and avidly watches Formula 1.