Aside from bringing good cheer, the holidays also can invite seasonal stress, a primary source of which is our addiction to spending. Last year, holiday sales grew 14.1% from the previous year and reached a record $886.7 billion. This year, though, holiday shopping may be more stressful than usual due to high inflation putting a strain on many people’s finances.
On top of inflation, holiday shoppers also face difficulties from credit card debt. In 2022, the average household credit card debt is $8,942, according to WalletHub’s data. At the beginning of 2022, there was over $1 trillion in total credit card debt, and that amount is continuing to grow.
To help consumers avoid post-holiday regret, WalletHub calculated the maximum holiday budget for over 550 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 2022’s Best Black Friday Ad Leaks.
Main Findings
Holiday Budget by City
| Overall Rank* | City | Holiday Budget |
|---|---|---|
| 1 | Newton, MA | $4,233 |
| 2 | Palo Alto, CA | $3,920 |
| 3 | Flower Mound, TX | $3,531 |
| 4 | Milpitas, CA | $3,480 |
| 5 | Bellevue, WA | $3,401 |
| 6 | Mountain View, CA | $3,258 |
| 7 | Sunnyvale, CA | $3,237 |
| 8 | Santa Clara, CA | $3,224 |
| 9 | Ellicott City, MD | $3,122 |
| 10 | Fishers, IN | $2,969 |
| 11 | Naperville, IL | $2,969 |
| 12 | Weston, FL | $2,955 |
| 13 | Cary, NC | $2,916 |
| 14 | Cedar Park, TX | $2,855 |
| 15 | Sugar Land, TX | $2,793 |
| 16 | Maple Grove, MN | $2,707 |
| 17 | Allen, TX | $2,670 |
| 18 | Roswell, GA | $2,598 |
| 19 | Rockville, MD | $2,574 |
| 20 | League City, TX | $2,541 |
| 21 | Rochester Hills, MI | $2,516 |
| 22 | Arlington, VA | $2,484 |
| 23 | Plymouth, MN | $2,479 |
| 24 | Troy, MI | $2,379 |
| 25 | Olathe, KS | $2,377 |
| 26 | Arlington Heights, IL | $2,360 |
| 27 | Eagan, MN | $2,357 |
| 28 | Farmington Hills, MI | $2,345 |
| 29 | Lee's Summit, MO | $2,299 |
| 30 | Scottsdale, AZ | $2,271 |
*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 rising inflation negatively impact the holiday shopping season? What are some caveats shoppers should be wary about this year?
Ask the Experts
Ph.D. – Applied Sociologist, Associate Professor Emeritus of Marketing, College of Business Administration – University of Akron
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Ph.D. – Associate Professor, Division Chair, Ken and Nancy Major Romanzi Term Chair in Marketing – Babson College
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Ph.D. – Professor of Marketing; Academic Director: MS- Data Sciences, Austin E. Cofrin School of Business – University of Wisconsin- Green Bay
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Area Chair Analytics (Marketing, MIS, Operations/SCM), SUNY Distinguished Teaching Professor – Binghamton University, State University of New York
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Ph.D. – Professor Emeritus; Former Dean and Barron Hilton Distinguished Chair, Conrad N. Hilton College of Hotel and Restaurant Management – University of Houston
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Professor Emeritus – University of Illinois, Springfield
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Methodology
In order to determine the cities with the biggest holiday budgets, WalletHub compared 558 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.
