Unwrapping the Truth: Parents Navigating Financial Hardship During the Holiday Season


The holiday season, synonymous with joy and celebration, often carries a hidden burden for many parents. Economic challenges, paired with the escalating costs of holiday traditions, can stretch already thin budgets to their limits.

A recent Bankrate survey provides startling insight: U.S. parents with children under 18 need almost $25,000 more annually than those without children to feel financially secure. Moreover, 56 percent of these parents say that to feel financially comfortable, they’d need to make at least $100,000 on average.

Beyond just the financial weight of buying gifts and planning gatherings, holiday travel, especially with children, adds a substantial strain to budgets. Whether it’s booking flights during peak travel times or ensuring comfortable stays for the family, the costs can rapidly accumulate.

With dedicated advanced planning and the right tools, such as a free checking account, parents can manage these financial challenges and allocate funds for the holiday season more effectively, while avoiding the tinsel tangle of debt.

If you haven’t already, start setting aside money from each paycheck between now and the holidays. Building this holiday-specific savings can help you avoid pricey credit card debt. You don’t want to still be paying off this holiday season a year from now.
— Ted Rossman | Bankrate Senior Industry Analyst

Holiday expenses statistics

  • Based on all U.S. adults who will be winter holiday shopping, 23 percent say it’ll put a strain on their budget. (Bankrate holiday shopping survey)
  • Of those who plan to do holiday shopping, 49 percent will be paying in cash. (Bankrate holiday shopping survey)
  • About one third (33 percent) of holiday shoppers say inflated prices will change the way that they shop. (Bankrate holiday shopping survey)
  • Of those who are traveling for the holidays, 31 percent are concerned it will place a strain on their budget and 25 percent are worried they’ll spend more than they’re comfortable with. (Bankrate holiday travel survey)
  • Less than half (45 percent) of those traveling will pay for their holiday travel with a debit card or cash — 57 percent plan on using a credit card to pay for at least some of their travel expenses. (Bankrate holiday travel survey)

Financial stress and holiday budgeting challenges

Many parents are grappling with underlying financial worries during the holiday season. The strain placed on them isn’t just about the present moment, but can ripple into future months, affecting long-term financial stability.

Some of the top holiday shopping matters weighing on parents’ minds include going into debt, strained budgets, stress around costs and employing money-saving tactics. Here’s how those concerns are affecting those with and without kids under 18 years old, according to Bankrate’s holiday shopping survey:

With kids under 18 Without kids under 18
Debt from holiday shopping 24% 18%
Budget strains from holiday shopping 27% 22%
Stress regarding holiday costs 31% 25%
Use of money-saving tactics 93% 85%

With almost a quarter of parents with kids under 18 facing debt due to holiday shopping, it’s clear that the festive season comes with making tough financial choices. The fact that more parents also feel the pressure to employ money-saving tactics further underscores how financial concerns loom larger for those who have children that haven’t yet reached adulthood.

A strained budget during the holiday season sets a precedent for upcoming months. When parents overextend during the holidays, they may find themselves grappling with accumulated debt well into the new year. Consequently, they can miss bill payments, face escalating interest rates and even incur a potential drop in credit scores. Over time, these setbacks translate into greater long-term financial hardships that get in the way of achieving financial goals and maintaining a stable standard of living.

For some parents, especially those from Generation X, holiday season financial strains may be further compounded by dual responsibilities: They are the “sandwich generation,” caught between raising their children and caring for aging parents. This multifaceted challenge means not only managing holiday expenses, but also juggling them alongside the day-to-day costs associated with caring for both the younger and older generations in their family.

Holiday travel and accommodation costs

For many, the holiday season evokes overdue family reunions, festive gatherings and cherished moments with loved ones. But it’s no secret that the journey to these heartwarming occasions often comes with a tangible price tag, especially if you’re bringing children along.

Travel preferences this holiday season, according to Bankrate’s holiday travel study, indicate that those with children under 18 are much more likely to travel by car (45 percent for those with children under 18 and 29 percent for those without). Additionally, only 35 percent of those with children under 18 don’t plan on traveling at all, compared with 60 percent of parents whose children are 18 or over.

The effect of inflation and soaring prices over the past year has impacted holiday travel plans for families, to the point that many parents of minors are changing their means of travel. Here’s a breakdown of how those parents have changed their travel plans due to increased prices:

Change to travel plans % of parents with children under 18
Source: Bankrate’s holiday travel survey
Driving instead of flying to destination 31%
Traveling for fewer days 28%
Taking fewer trips 26%
Selecting less expensive accommodations and/or destinations 25%
Traveling a shorter distance 23%
Engaging in cheaper activities 22%

Yet, avoiding the journey doesn’t entirely eliminate costs related to gatherings. Opting to host guests can usher in its set of financial challenges, from ensuring the comfort of guests with enhanced entertainment to additional food supplies and costs for festive feasts. Being an accommodating host is gratifying, but it comes with its own attached expenses that shouldn’t be overlooked.

Seasonal events and activities

Festivities and outings can come with their own set of expenses. Organizing or attending holiday parties might include costs such as:

  • Renting a space or prepping your home
  • Food and drinks
  • Decorations
  • Entertainment, such as party games or hired professionals
  • Gifts and party favors
  • Attire

Meanwhile, the festive season also beckons with numerous (and costly) attractions:

  • Holiday markets
  • Theater shows and concerts
  • Ice skating
  • Holiday craft workshops

These activities can significantly eat into holiday budgets, especially when accommodating an entire family. However, ways to save are within reach. Opting for potluck meals is one way to spread out food costs, for example. You could also get crafty with DIY decorations or sourcing second-hand items.

Embracing simple, at-home entertainment or community-based gatherings can be equally memorable without the hefty price tag.

“A lot of communities have various free or low-cost holiday activities that you can partake in,” Rossman of Bankrate says. “Driving around looking at Christmas lights is another fun, low-cost activity that I remember doing as a kid and now enjoy doing with my own children.”

Gift purchasing

Gift-giving is an integral part of the holidays for many, and data from the National Retail Federation highlights the fervor of this tradition: Holiday sales reached $936.3 billion in 2022, up 5.3 percent from the previous year.

But purchasing heartfelt gifts doesn’t have to deplete your wallet. One way to alleviate gift costs is to focus on homemade gifts or secondhand options.

“In fact, ‘buy nothing’ groups have become popular on Facebook and other platforms,” Rossman says. “My wife loves acquiring clothes and toys from friends and neighbors whose kids have outgrown them.”

Some other strategies to ensure gift-giving remains generous without straining your budget include:

  • List before you shop: Make a list of all recipients and potential gift ideas within an allocated budget. This can help prevent last-minute, potentially pricey, impulse buys.
  • Start early: Shopping early can mean access to deals and a wider variety of options, as well as allowing you to spread out your spending rather than having to take on all purchases in December.
  • Leverage sales and discounts: Make use of Black Friday, Cyber Monday and pre-holiday sales.
  • Use gift cards: According to a Bankrate survey, consumers have $187 worth of unused gift cards on average. You could tap into that value or re-gift the cards themselves to minimize the gift-buying costs coming directly from your pocket.

Increase in everyday expenses

Adding to the costs of the holiday season, everyday expenditures also tend to escalate during this time.

Energy bills: Consumers have already been seeing high energy bills this year, with 53 percent saying they had higher electricity bills this summer, which put a strain on their finances, according to Bankrate’s extreme weather survey. As temperatures drop, the reliance on heating systems grows, causing gas and/or electricity bills to go up. Combine this with festive lighting, more hours spent indoors and more hot meals, and it’s evident why consumers may see a spike in energy bills.

Groceries: Feasts and treats are a part of the holiday spirit, from hosting dinners to baking holiday goodies. Grocery bills can soar for this reason and should be accounted for in a holiday budget.

Winter wardrobe: The chill of winter necessitates warmer clothing. Pair that with additional clothing expenses for new outfits related to themed holiday events.

Impulse purchases: The season is rife with sales and deals. While shopping for gifts, the temptation to buy something for yourself can be overwhelming. These impulse buys, even if they’re seemingly minor, can cumulatively strain the holiday budget.


Money tip:

To save on festive lighting, use energy-efficient LED lights and set timers for outdoor lights to ensure they’re on only during the most impactful hours.

Coping strategies and financial hardship assistance programs

The festive season, a symbol of warmth and joy, can paradoxically cast a cold shadow of financial anxiety. The pressure of trying to preserve the holiday cheer while juggling monetary concerns is a challenge faced by many.

The earlier you start planning, the more time you’ll have to budget, save and apportion spending. Setting up a holiday savings fund now, where a small portion of your income is saved specifically for holiday expenses, can be beneficial, particularly in a savings account with a high yield.

When it comes to spending on gifts, it’s important to set realistic expectations with family and friends.

“If you’re going to a big family gathering, maybe reset the expectation that everyone needs to bring a gift for everyone else,” Rossman of Bankrate says. “Perhaps you could consider only buying for the children or have everyone pick a name out of a hat and buy for that one individual. You might feel awkward about speaking up, but there’s a good chance that others feel this way too.”

If traveling is on the cards, be strategic. Utilize credit card reward points or frequent flier miles to reduce airfare costs. For instance, if you’ve been using a travel rewards credit card throughout the year, now might be the perfect time to redeem those points for flights or hotel stays. Additionally, consider more budget-friendly travel options, such as carpooling or taking a train, which might be more economical than flying, especially for shorter distances.

If financial stress around holidays becomes too much, it may be worth seeking guidance from a financial advisor or getting support from a financial hardship assistance program. Here are some resources to look into:

  • Consumer Credit Counseling Services (CCCS): A nonprofit overseen by the National Foundation for Credit Counseling, CCCS can provide guidance on managing debt, budgeting and financial planning.
  • Budgeting apps: Technology can be a useful tool for managing finances. Many budgeting apps are available to connect with your bank account, track spending for you and offer helpful savings features.
  • Community Action Agencies: These local nonprofit organizations provide several services to those facing economic hardships, such as rent assistance and job training.
  • Local community centers: Community centers and churches often have outreach programs during the holidays. These can range from toy drives to meal services.

Budget-friendly holiday questions

  • Here are a few tips for cost-conscious parents:

    • Book early to take advantage of early bird discounts.
    • Travel during off-peak times, such as on the day of a holiday or less popular travel days, to save more.
    • Use credit card or frequent flier points.
    • Consider vacation rentals, hostels or family-friendly Airbnb options, which may offer more space at a fraction of hotel prices.
  • Firstly, setting an early and strict holiday budget is crucial. This not only ensures all expenses are accounted for but also acts as a deterrent to impulsive spending. Beginning the holiday shopping in advance can help by spreading out expenses and avoiding the last-minute rush.

    Instead of relying on credit cards, which can accrue significant interest, consider using cash or a debit card for purchases.

    Handmade and second-hand gifts are another way to economize. Moreover, it might be worth limiting the gift list to prioritize close family and friends.

  • Determine which trends resonate most with your family and invest selectively in them. Embracing a DIY approach can offer a personalized touch to trendy decorations and gifts at a fraction of the cost. Second-hand or thrift stores also present a treasure trove of unique and affordable decorations.

    If the trending allure is an activity or a popular outing, a collective approach can be cost-effective. Team up with friends or other families to enjoy these experiences while sharing the cost.

  • Budgeting apps like Mint or PocketGuard are ideal for setting specific holiday budgets, ensuring you’re within spending limits.

    There are also a number of AI-powered tools that can help boost your savings by utilizing advanced technology to automatically detect savings opportunities. PayPal’s Honey, for example, could be a godsend during the holiday season shopping spree: It automatically finds cashback offers, discounts and coupon codes on purchases you make online.

    Meanwhile, an app such as GiftPlanner can assist with a more organized gift-giving approach. It allows users to earmark a budget for every individual on their shopping list.


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