The Holiday Expenses That We’re Still Paying

The holidays are a distant memory by now, with new toys already neglected and that bright new sweater stashed in a closet.

The bills for those items, however, have been showing up in mailboxes since mid-January — giving only a three-week respite after Christmas Day ends. Every visit from the mailman brings the potential for a reminder that the holiday gifts, parties, decorations, Christmas cards and plane flights to visit relatives didn’t pay for themselves.

While 81% of people in a recent study by the National Endowment for Financial Education, done in partnership with Credit.com, used cash to pay for their holiday expenses in 2012, more than half of those (59%) also used credit cards.

The online survey of 2,132 U.S. adults is full of data on how they paid for holiday expenses, including highlighting the differences between men and women when it comes to holiday finances.

Of the 59% who used credit cards, men (65%) were more likely than women (54%) to do so.

Ideally, people should be saving money throughout the year for holiday shopping so they don’t have to use credit cards and face interest charges if they don’t pay the bills in full in January, says Paul Golden, spokesman for NEFE.

“This is not an expense that sneaks up on people,” Golden says. “This is an expense that we all have.”

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Credit cards and cash aren’t the only ways respondents paid for their holiday indulgences. Twenty-two percent tapped into their savings for such expenses, 7% used year-end bonuses, and 7% used layaway services.

One problem with holiday expenses is that without a budget, shoppers may lose control and wind up buying more gifts for others — or themselves. The NEFE/Credit.com study had some good news on this front: 79% had a budget for holiday-related expenses.

However, having a budget and actually following it are two very different things. Of the people who had a budget, 29% exceeded it for holiday expenses. The amount they exceeded it by varied: 10% were over budget by less than $100, 11% by $100 to $250, 4% by $251 to $500, and another 4% by more than $500.

“If you don’t have an idea of how much money you’re going to spend, the odds of using a credit card are going to increase,” Golden says.

The good news was that half of the people didn’t exceed their holiday budget.

Men, however, were more likely than women to surpass their budget, while women stayed within theirs. Women (54%) were more likely than men (45%) to stay on budget.

Where is all of that money going? Gifts, of course, were the major expense, but the other reasons for going over budget may surprise you.

Among those who exceeded their holiday budget, 86% went over by buying gifts for family, friends and co-workers. Of that group, 77% said that gifts for family caused them to go over budget, with women (85%) more likely to do this than men (70%).

Gifts for friends caused 27% to go over budget, and 12% spent more than they planned on co-workers. Think of that the next time you pull out a credit card when shopping for a Christmas gift for a co-worker.

Other holiday expenses that respondents said caused them to go over budget included: 21% for entertaining, 17% for travel, 12% for decorations, and 10% said sending holiday cards caused them to exceed their budget.

But spending more money on the holidays than they budgeted for using credit cards didn’t worry most people in the survey. While 25% were at least somewhat concerned that their use of credit cards will affect their credit in the near future, the majority — 75% — weren’t at all concerned about it. (If you’re looking for someone to buy you that expensive Christmas present you really want, those are the people to ask.) And if you are concerned that your credit card usage has impacted your credit, you can use Credit.com’s free Credit Report Card for an overview of your credit standing. In addition, you can download each of you credit reports from the three major credit bureaus for free once a year.

Image: iStockphoto