2024 Holiday Spending Surge: Impact on Your Wallet & Investments
As we head into the 2024 holiday season, consumers and investors alike are gearing up for what is expected to be a significant surge in holiday spending. Retailers are preparing for increased activity, and early projections point to an overall boost in sales compared to the previous year. But what does this mean for your wallet and long-term financial strategy?
Whether you’re an eager holiday shopper or a thoughtful investor, understanding how this spending surge impacts personal finances and investments is key to making smart financial decisions during the most wonderful (and expensive) time of the year.
How Much Will Americans Spend This Holiday Season?
Projections for holiday spending in 2024 show a healthy year-on-year increase, with overall retail sales expected to reach impressive numbers.
Based on Mastercard SpendingPulse insights, which track in-store and online retail sales across all payment types, holiday spending from November 1 to December 24, 2024, is projected to rise by 3.2 percent year-over-year, excluding automotive sales.
E-commerce is also expected to grow even stronger, nearly doubling the rate of brick-and-mortar spending. This heightened activity can largely be attributed to consumer confidence, pent-up demand, and retail promotions keen on capturing shoppers’ dollars.
“For individual consumers, this surge in spending could mean additional strain on holiday budgets, which is why it’s essential to approach the season with a plan in place. Getting caught up in the spirit of giving is easy, but overspending can throw a wrench into your long-term financial goals. By setting clear limits and sticking to them, you can enjoy the season while still staying financially responsible,” advises Nolan Crean, Vice President, Investments at David Lerner Associates, Inc.
The Link Between Holiday Spending & the Economy
Holiday spending often serves as a bellwether for broader economic health. When consumers feel financially secure, they are more willing to spend on gifts, travel, and holiday festivities. This increased spending stimulates the economy, benefiting sectors from retail to hospitality. However, with inflation and rising interest rates still looming over many households, there is also a risk of overspending, particularly for those who rely on credit to finance holiday purchases.
For those invested in the stock market, retail and consumer discretionary sectors tend to see a bump during the holiday season, offering potential short-term gains. However, it’s important to remember that these seasonal trends don’t always lead to long-term financial success. A surge in spending can temporarily inflate stock prices, but market volatility should always be factored into your overall investment strategy.
Adjusting Your Financial Plan for the Holidays
The holiday season, emphasizing consumerism, can often derail a carefully constructed financial plan. While spending on loved ones and holiday festivities is part of the fun, maintaining balance is essential.
Before diving into holiday shopping, take some time to revisit your financial goals for the year and adjust where necessary. Are there specific savings targets you still need to meet? Do you have investment contributions that are falling behind?
Additionally, creating a detailed holiday budget can help you avoid going overboard. Start by assessing how much you can spend without compromising your financial future. It’s also wise to factor in unexpected expenses, such as last-minute gifts, holiday travel, or an increase in utility bills during the colder months. By planning for these extras, you’ll avoid post-holiday financial hangovers and stay on track with your financial goals.
Impact on Investment Strategy
The holiday spending surge isn’t just about consumer habits; it can also influence market behavior. With higher retail sales expected, investors should be prepared for fluctuations in the stock market, particularly within consumer-facing sectors like retail, e-commerce, and travel. Retail stocks might see a temporary boost, but it’s important not to make investment decisions based solely on seasonal trends.
For long-term investors, the holiday season presents an opportunity to review your portfolio. Are you diversified enough to weather market ups and downs? Are your current investments aligned with your long-term goals?
If you’re unsure, now might be a good time to consult an investment counselor financial advisor to assess whether your strategy needs adjustment. The holiday season is busy, but it can also serve as a valuable checkpoint for your investments.
How to Be Generous Without Breaking the Bank
The holiday season often brings with it the desire to be generous, whether it’s purchasing gifts for family and friends or donating to charitable causes. While giving is an important part of the season, it’s crucial to maintain financial responsibility. Overspending on gifts or making large charitable donations can destroy your financial plan.
A simple way to balance generosity with financial responsibility is to set a specific budget for holiday giving. Consider non-monetary gifts, such as experiences, homemade items, or thoughtful gestures that don’t break the bank. If you plan to donate to charity, research the organizations beforehand and set limits on how much you can afford to give without disrupting your financial goals. It’s possible to spread holiday cheer without jeopardizing your financial future.
The 2024 holiday season is shaping up to be a significant one, with spending expected to surge and have a broad impact on both individual wallets and the overall economy. While it’s a time of celebration, it’s important not to lose sight of your long-term financial goals. Creating a clear budget and reviewing your investment strategy, allows you to enjoy the holidays without compromising your future.
Make smart financial decisions that benefit your short-term happiness and long-term security this holiday season. At David Lerner Associates, we’re committed to helping you make informed choices about your investments and financial future. Connect with one of our financial experts today to ensure your financial plan is on track for the year ahead and beyond!
Material contained in this article is provided for information purposes only and is not intended to be used in connection with the evaluation of any investments offered by David Lerner Associates, Inc. These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable– we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.