The holidays bring plenty of joy, but they can also spark seasonal stress, much of it tied to overspending. Holiday sales are projected to rise 3.7% to 4.2% this year, reaching more than $1 trillion. At the same time, credit card debt remains a challenge. In Q3 2025, the average household carried $10,227 in credit card debt, up 2.3% from the year before, according to WalletHub’s data. Adding holiday shopping on top of that can quickly increase the financial strain, especially if balances roll into the new year.
To help people spend wisely, WalletHub analyzed more than 550 U.S. cities to determine a maximum holiday budget for each, factoring in income, age, and savings-to-expenses ratios.
WalletHub is also offering custom holiday budget calculations for all members between now and Dec. 25. Join our community today to get your personalized budget and, if you’re planning ahead, don’t miss our roundup of 2025’s Best Black Friday Ad Leaks.
Chip Lupo, WalletHub Analyst
Main Findings
Average Holiday Budget by City
Note: *No. 1 = Biggest
In-Depth Look at the Highest Holiday Budgets in 2025
Palo Alto, CA
Palo Alto, CA, has the highest average holiday budget, both among small cities and overall, at $4,485. The fact that Palo Alto ranks high isn’t too surprising given that it has the highest median annual household income in the nation, at nearly $229,000.
Plus, the average Palo Alto resident has over $7,997 left every month after paying all their essential expenses, and has nearly $27,000 in savings. Since people in Palo Alto are living luxurious lifestyles, it makes sense that they shell out quite a bit of money over the holidays.
For comparison, a Palo Alto resident’s $4,485 holiday budget is massive when put next to the lowest budget – just $212 in Elizabeth, NJ.
Sunnyvale, CA
The medium-sized city with the highest holiday budget is Sunnyvale, CA, at $3,691 on average. That’s also the seventh-highest budget among all cities in our study.
Sunnyvale is located in one of the most educated metro areas in the country, so its residents naturally have high incomes. Sunnyvale’s median household income is over $181,000, the fifth-highest in the U.S. On top of that, the average Sunnyvale resident has over $21,000 in savings, and has nearly $5,800 left over after paying all their essential monthly expenses.
Finally, Sunnyvale residents’ average debt-to-income ratio is extremely low. Residents’ monthly payments toward credit cards, mortgages, student loans, etc., take up less than a quarter of their monthly income. People in Sunnyvale can afford to spend a lot on their holiday celebrations and gifts as a result.
San Jose, CA
San Jose has the highest holiday budget among large cities, at $3,035 on average. It only ranks 29th-highest among all the cities studied, though, with many small and medium-sized cities having higher budgets. This makes sense given that large cities tend to have more economic diversity. A bigger mix of affluent and non-affluent residents means a lower overall budget average.
That said, San Jose’s median annual household income is not too shabby, at over $148,000. Plus, the average San Jose resident has over $4,400 left over after paying their essential expenses each month, and currently holds over $17,000 in savings.
While the typical holiday budget in San Jose of $3,035 trails those in the top small and medium sized cities by a wide margin, it still remains substantial. For comparison, over 110 of the cities in our study have holiday budgets that are below $1,000.
Ask the Experts
Whether you plan to shop in person or online, holiday spending can add up quickly. 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 1 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 inflation negatively impact the holiday shopping season?
- Will the shortened holiday season (just 28 days between Thanksgiving and Christmas) have an impact on holiday shopping this year?
Ask the Experts
Ph.D., Associate Professor, Herbert Huey McElveen Developing Scholar & Leslie and Dal Miller Professor, Director of E. J. Ourso College of Business Behavioral Research Lab, E. J. Ourso College of Business - Louisiana State University
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Ph.D., Associate Professor and Assistant Department Chair, Department of Marketing and Professional Sales, Michael J. Coles College of Business, Kennesaw State University
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Ph.D., Chair and Professor, Department of Marketing, Montclair State University, Feliciano School of Business
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Joseph J. Aresty Professor, Executive Director, Wharton Co-Sponsorship of Indian School of Business, Professor of Marketing - The Wharton School, The University of Pennsylvania
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Ph,D., Acting Chair, Department of Management, Endres Associate Professor, Farmer School of Business - Miami University
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Ed.D., CFCS, Professor Retail & Consumer Science, Chair Human Development & Consumer Sciences, Cullen College of Engineering - University of Houston
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Methodology
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 considers 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 as of October 21, 2025 from the U.S. Census Bureau, U.S. Bureau of Labor Statistics, SimpleTuition, Tax Foundation, IRS.com, SlickDeals and TransUnion.
WalletHub experts are widely quoted. Contact our media team to schedule an interview.