M1, an investing platform that allows users to invest, borrow, spend, and earn in one place, this week released findings from its 2023 holiday shopping and saving survey, gleaned from insights from nearly 700 M1 users. The findings provide a comprehensive look into the significant shifts happening among some consumer spending patterns, reflecting the ongoing impact of inflation and rising costs during the 2023 holiday season.
As the December holidays quickly approach, many are rethinking their holiday spending habits in the wake of rising costs of many everyday items. Recent results from the U.S. Bureau of Labor Statistics’ Consumer Price Index Summary showed the food at home index, or how much will be spent on grocery items, increased 2.1% over the past year. The cost of shelter is up an average of 6.7%, and transportation services costs are up 9.2%.
Despite slowing, inflation and high costs of travel continue to be a problem for some Americans. Roughly 20% of survey respondents said they would be spending less on their holiday travel plans this year compared to 2022, with 7% ditching holiday travel plans altogether, citing inflation and rising costs as their primary reason. Approximately 10% of those who said they’ll be spending less on travel are opting for train or car travel as opposed to air travel, and 15% plan to rely on free activities.
More than 40% (43%) of respondents plan to spend less on luxury purchases like jewelry, clothes, and spa purchases this holiday season, while 30% are cutting back on their restaurant and dining spending. While luxury items may stall this year, 30% of people say they will still spend more on everyday necessities like food and personal care items this holiday season.
For those cutting back on their typical gifting spend this year for friends, family and coworkers, 19% are reallocating those funds to investments and 13% to savings accounts. Just 7% of respondents reported that they’d be reallocating these saved funds toward vacations, experiences, or larger purchases like homes or cars. One in 10 respondents are making less income than 2023, so they do not have additional funds to reallocate.
Traditional savings bonds are a thing of the past. Just 4% of respondents say they’ve gifted them before. But 48% of respondents plan to give cash this holiday season, with 10% planning to give contributions to a child’s 529 plan, and 8% planning to give gold, silver, or another precious metal. Only 4% plan to give cryptocurrency or NFTs as a gift.
“As we head into the new year, this new data reflects a shift towards more conservative money behavior as consumers navigate the challenges that come with inflation and rising costs this holiday season,” M1 founder and CEO Brian Barnes said. “By understanding these evolving spending patterns, we can help individuals make informed financial decisions, ultimately building their wealth.”
