Besides bringing good cheer, the holidays also can invite seasonal stress, a primary source of which is our addiction to spending. Plus, this year, holiday shopping may be more stressful than usual considering the fact that the COVID-19 pandemic has left a lasting impact on many people’s finances. However, holiday sales still grew 8.3% last year despite the pandemic, so it’s likely we will see even better growth this year now that conditions have been improving.
In addition to the COVID-19 pandemic, holiday shoppers also face difficulties from credit card debt. In 2021, the average household credit card debt is $7,854, according to WalletHub’s data. At the beginning of 2021, there was over $900 billion in total credit card debt, and WalletHub projects a net increase of around $100 billion this year.
To help consumers avoid post-holiday regret, WalletHub calculated the maximum holiday budget for each of 570 U.S. cities using five key characteristics of the population, such as income, age and savings-to-monthly expenses ratio.
Are you in danger of wrecking your Black Friday spending plans? WalletHub will calculate custom holiday budgets for all WalletHub members between now and Dec. 25, so make sure to join our community today. And if you want to get ahead of the shopping crowds, check out our preview of 2021’s Best Black Friday Ad Leaks.
Main Findings
Holiday Budget by City
| Overall Rank* | City | Holiday Budget |
|---|---|---|
| 1 | Flower Mound, TX | $3,427 |
| 2 | Sunnyvale, CA | $3,085 |
| 3 | The Woodlands, TX | $3,073 |
| 4 | Sugar Land, TX | $3,029 |
| 5 | Mountain View, CA | $2,959 |
| 6 | Ellicott City, MD | $2,950 |
| 7 | Naperville, IL | $2,941 |
| 8 | Bellevue, WA | $2,927 |
| 9 | Carmel, IN | $2,806 |
| 10 | League City, TX | $2,778 |
| 11 | Milpitas, CA | $2,710 |
| 12 | Allen, TX | $2,688 |
| 13 | Pearland, TX | $2,669 |
| 14 | Maple Grove, MN | $2,577 |
| 15 | Cary, NC | $2,541 |
| 16 | Troy, MI | $2,524 |
| 17 | Plymouth, MN | $2,499 |
| 18 | Arlington, VA | $2,434 |
| 19 | Newton, MA | $2,399 |
| 20 | Columbia, MD | $2,379 |
| 21 | Rochester Hills, MI | $2,338 |
| 22 | Palo Alto, CA | $2,276 |
| 23 | Arlington Heights, IL | $2,260 |
| 24 | Pleasanton, CA | $2,248 |
| 25 | San Ramon, CA | $2,231 |
| 26 | Weston, FL | $2,228 |
| 27 | Santa Clara, CA | $2,219 |
| 28 | Eagan, MN | $2,166 |
| 29 | Cambridge, MA | $2,157 |
| 30 | Frisco, TX | $2,133 |
*No. 1 = Biggest
Ask the Experts
Holiday spending is driven largely by the current economic climate, among other factors. In order to help consumers keep their holiday budgets in check, we asked a panel of experts to share money-saving advice and insight on factors that affect holiday spending. Click on the experts’ profiles below to read their bios and thoughts on the following key questions:
- What tips do you have to help people avoid holiday overspending?
- How do you think the current social and economic environments are influencing household holiday spending decisions?
- How can people show love and appreciation over the holidays without spending money on gifts?
- Nearly one in 10 adults are shopaholics. How can someone tell if he or she is a shopaholic?
- Should we expect a rise in holiday spending this year or will COVID-19 negatively impact the holiday shopping season? What are some caveats shoppers should be wary about this year?
Ask the Experts
Ph.D. – Professor, Gatton Endowed Chair in Marketing, University Research Professor, and Department Chair, Department of Marketing and Supply Chain, Gatton College of Business and Economics – University of Kentucky
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Assistant Professor of Marketing, Stern School of Business – New York University
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Kravis Professor of Business, Graduate School of Business – Columbia University
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Ed.D., CFCS – Chair & Professor Human Development & Consumer Sciences, College of Technology – University of Houston
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Professor of Practice, W. P. Carey School of Business – Arizona State University
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Faculty Member, Doctor of Business Administration program – Walden University
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Methodology
In order to determine the cities with the biggest holiday budgets, WalletHub compared 570 cities across five key metrics: 1) Income, 2) Age, 3) Debt-to-Income Ratio, 4) Monthly Income-to-Monthly Expenses Ratio and 5) Savings-to-Monthly Expenses Ratio. Our calculation is based on WalletHub’s proprietary algorithm, which takes into account the aforementioned five factors to determine the holiday budget for a particular city.
At a high level, our algorithm considers a consumer to be in a comfortable financial position to engage in holiday spending if they have: 1) enough emergency savings to cover at least six months of expenses and 2) a debt-to-income ratio smaller than 22 percent for a renter or 43 percent for a homeowner. Depending on a city’s specific characteristics, the algorithm adjusts upward or downward to create a custom estimate.
Finally, we use the same algorithm to provide a personal holiday-budget estimate for all WalletHub members between now and Dec. 25.
Sources: Data used to create this ranking were collected from the U.S. Census Bureau, U.S. Bureau of Labor Statistics, SimpleTuition, Tax Foundation, IRS.com, SlickDeals and TransUnion.