12 ways to cut holiday shopping costs as spending is estimated to top $1 trillion

In an unprecedented move, Americans are expected to spend more than $1 trillion during the fast-approaching holiday shopping season.

The colossal prediction for November and December 2025 from the National Retail Federation comes as the trade group predicts that American consumers will make this the most expensive Christmas on record. The expectation is that this celebration will take place despite turbulence, such as an uncertain economy, unemployment and tariffs that will likely drive up the price of many gifts that people plan to buy.

Overspending can surface when shoppers fall prey to bad actions, such as impulse purchases for friends and family. And opulence can fuel other forms of irresistible spending that can lead to excessive generosity.

Consumers plan to spend an average of nearly $891 on holiday gifts, food and other items this year. These findings come from NRF’s latest holiday survey, conducted by Prosper Insights & Analytics, and are not linked to holiday sales forecasts. The new average is believed to be the second highest in the 23-year history of the study.

Another one report of the BMO Real Financial Progress Index predicts even more spending, including retail, travel and entertainment spending. It’s estimated that Americans will spend an average of nearly $2,800 this season, more than $1,000 more than in 2024. As such, the analysis states that 70% of consumers are setting tighter budgets for the holidays, and more than 65% report they are changing their shopping method due to tariffs.

“The holidays this year come on the heels of a period defined by inflation and price volatility for everyday items, leaving many consumers confused and stressed as they plan for the holiday festivities,” said Paul Dilda, head of U.S. consumer strategy at BMO. “Against this backdrop, shoppers are changing their behavior, spending more in some areas, cutting back in others and trying to build budgets they can stick to during the holidays.”

At the same time, this holiday season brings with it cautious optimism. According to According to Nationwide’s 2025 Economic Impact Survey, about 55% of Americans are confident about their financial situation. Yet 42% want to spend less this holiday season than last year. 38% buy gifts and 20% say they don’t buy gifts.

The bright side is that there are many ways to reduce holiday spending and help carry less of that debt, or possibly none at all, into 2026. Based on BLACK BUSINESS research, the steps may include:

• Set a budget and stick to it. Be specific about how much you want to spend on each item, whether it’s gifts, food or other categories. Check regularly to make sure you are staying on track.

• Make a thorough shopping list that includes who you are buying for, an estimate of expenses, and details to avoid overspending.

• Shop early for discounts and sales, before the rush, to avoid last-minute spending and possibly higher prices.

• Use cash or debit cards, as opposed to credit cards, for purchases. Data shows that people who use credit cards often overspend. Plus, paying with money helps you tangibly see what you’re spending and stay within your budget.

• Avoid store credit cards that offer one-time discounts when you open one. The cards often come with high interest rates and other expensive fees. They can trigger impulse buying by pushing you to buy more gifts than initially planned.

• Make sure you don’t make unplanned purchases or use some of the money you’ve set aside for spending.

• Research discounts and sales before you shop. Check online how much the item you want to buy costs in stores. Check out Black Friday and Cyber ​​Monday sales and look for digital or paper coupons from retailers.

• Don’t be afraid to take advantage of a holiday gift exchange. This can be done with family or friends and cut back. Set a budget for the gift exchange so that everyone’s financial expectations are the same.

• Homemade gifts can be a useful way to save money. They may not work for everyone, but they can be memorable. For example, photos for grandparents or cookies for others around you can be good options.

• Shop unorthodox places like flea markets, thrift stores, resale sites and social media to look for less expensive gifts. You may see vintage gifts that are more special than new ones.

• Use any unused gift cards, vouchers or store credits that may still work to purchase gifts. It can be a smart way to get a gift basically for free.

• Do your homework online at websites such as Credit.com with practical tips to cut back on holiday expenses.

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