rewrite this title You’re ‘wired’ to overspend during the holidays, expert says — here’s what to do about it

The holiday season is a time to give thanks, reflect on the past year, and spend time with family and friends. However, if you’re not careful, it can also be a time you overspend on holiday purchases.

About 83% of Americans plan to buy gifts for friends and family this holiday season, according to a NerdWallet poll.

Americans expect to spend an average of $1,014 on Christmas or other holiday gifts in 2024 — “substantially more” than the $923 reported last year, according to a Gallup poll published Oct. 25.

Roughly 10% of consumers expect to draw from their emergency fund to buy gifts, and 9% will prioritize gifts over household bills such as utilities and debt payments, according to the NerdWallet survey, published Oct 8.

Almost half of shoppers will fund this year’s spending with loans or credit cards, according to a recent survey by professional services firm EY. Meanwhile, 28% of people are still paying off credit card debt from the 2023 holiday season, NerdWallet found.

People have an innate impulse to overspend, experts said. They are “wired” to be consumers, said Brad Klontz, a psychologist, certified financial planner and behavioral finance expert.

“For 99% of our time on Earth, thinking about the long-term future hasn’t served us very well,” said Klontz, who is a member of CNBC’s Financial Advisor Council and the CNBC Global Financial Wellness Advisory Board. “Meeting our immediate needs was what it was all about.”

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The short-term gratification of giving gifts to loved ones can eclipse the long-term focus that’s needed to be good with money, Klontz said. That’s where many people fall short, he said.

“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,” he said.

Additionally, consumers may feel the social pressure to spend more than they might like because they don’t want to appear “cheap,” said Andrea Woroch, a consumer finance expert.

Many companies also promote deals — on Black Friday and Cyber Monday, for example — that can create a “buying frenzy,” she said.

There are various ways for consumers to keep their holiday tabs within a reasonable range, experts said.

Here are some of their tips.

Develop a spending plan now around how much to allocate to the holiday season, Klontz said. It’s not too late, even over Black Friday weekend. Consumers can use a gift list tracking app such as Santa’s Bag to track purchases and actual spend, Woroch said.Think beyond gifts, Woroch said. There are many other potential seasonal expenses, including groceries to feed out-of-town guests or for holiday feasts, holiday party attire, family photos, greeting cards and postage, seasonal outings, dinners with friends, fundraising events at your kids’ school and donation drives. You may need to cut back on certain costs or spend less on gifts to accommodate these, she said.