As the holiday season approaches, it seems that even the wealthy, whose high incomes have stayed relatively stable, are planning to cut back on holiday spending.
As reported by the Wall Street Journal, the American Affluence Research Center polled 439 people in America's wealthiest 10 percent. The survey found that respondents planned to spend an average of $2,370 during the 2010 holiday season, slightly less than the $2,399 spent on average in 2009. Other findings include the following:
- More than two-thirds of the survey respondents are planning to spend the same amount they spent last year.
- About 3 percent indicated they planned to spend more money than they did in 2009.
- About 28 percent of respondents reported that they planned to spend less this year.
- Of the people who planned to spend less, the average planned to spend 14.9 percent less than last year.
- Another 12 percent said they didn't plan to spend money on gifts at all this year.
While $2,370 seems like a lot of money to everyday, working-class people, it's not great news for retailers, since the American Affluence Research Center estimates that the spending by America's wealthiest 10 percent makes up fully half of all consumer spending.
An Accenture study of holiday spending, conducted in September, found that a whopping 83 percent of all consumers expect to spend the same or less on holiday gifts than they did in 2009.
Why the wealthy are reining in spending
The Wall Street Journal interviewed Ron Kurtz, president of The Kurtz Group, which runs the American Affluence Research Center, to find out why the wealthy were cutting back or at least not spending more. Kurtz believes the reason is two-fold.
For one thing, even America's wealthiest have seen their net worth decrease in the past few years. In addition, they are reluctant to increase spending if they're not confident that their disposable income will grow, especially with the likelihood that taxes will take a bigger bite out of their bottom line.
How to save for the holidays
No matter what you plan to spend, it's prudent to plan ahead. The survey respondents clearly have an idea of how much they plan to spend, and that's one takeaway that's useful at any income level. Some families let the holiday season sneak up, charge gifts on a credit card, and then eat Ramen all of January to pay the debt.
A little planning is all it takes, and there's no time like the present. Most anyone can open a high-interest savings account specifically for gifts, decide how much to spend during the holidays, and use automatic transfers to make sure the funds are there when it's gift-giving time.