With the holiday season behind us, it can be alarming to realize how much we actually spent on gifts for ourselves and others.
Although over spending is falsely attributed to a lack of discipline, there are other underlying factors that experts point to such as emotional, social and cognitive forces alongside incentives by sellers.
At the center of holiday spending is emotion. The holiday season is intertwined with nostalgia, tradition and togetherness which makes the action of giving a gift a powerful way to express love and appreciation for close friends and family.
“I usually spend more money around Hannukah time because I love to get gifts for my friends and family as a way to show my appreciation for them,” said junior Violet Berman.
Retail psychology studies indicate that emotions such as loneliness, joy and even stress push people toward making purchasing decisions they would not normally make.
Additionally, the holiday atmosphere creates what researchers say is the “warm glow,” activating the reward centers in the brain that make spending feel like a rewarding experience.
A LendingTree survey found that 63% of Americans said that emotions influence their spending habits with 74% of those shoppers admitting it leads to overspending.
“Spending in moderation is ok. However when it happens too often then it can become a problem quickly,” said Chief Consumer Finance Analyst at LendingTree, Matt Schulz.
Social pressures also push spending higher. 66% of Americans feel that there is an unhealthy cultural pressure where they have to spend money on holiday gifts even when they can not afford them, according to a Beyond Finance survey.
Many feel torn between wanting to spread joy through buying gifts but with the added pressure of not being able to afford them.
Social media exacerbates these pressures by showing holiday pictures, hauls of gifts and expensive experiences. Many people tend to match lifestyles displayed on social media because of a fear of missing out which results in stretching their finances thin.
Junior Mia Eskin said, “Seeing gifts posted online during the holiday season definitely increases my likelihood of purchasing them because the constant exposure creates a sense of urgency and makes the products feel more desirable. I also feel like I then need to buy it because if it is an influencer, it kind of shows me it is on brand and inspires me to add it to my future wish lists.”
Moreover, human brains are programmed to take shortcuts especially when under excitement or stress.
When shopping during holidays, biases, like the “present bias”, prioritize immediate rewards over the long term consequences of actions, which heavily influence decisions.
Present bias means that people value the short term gratification of purchasing an item rather than the long term impact on their budget.
Another prevalent bias is the principle of scarcity which is when sellers say “there is a limited time only” on certain products, making people feel compelled to buy items immediately. This principle is often utilized all season long, turning people’s impulse and behavior into unhealthy habits.
Not only does overspending impact finances but also well-being. A study by LendingTree showed how shoppers that overspent during holiday season later regretted their purchasing decisions.
Therefore, understanding the psychology of holiday spending does not mean taking away from the joy of holidays, but making informed decisions that reflect personal values regardless of social pressures.
