156: Christmas Spending 101: Statistics, Thoughts, Tips & Tricks

Welcome to the Invested Dads Podcast, simplifying financial topics so that you can take action and make your financial situation better. Helping you to understand the current world of financial planning and investments, here are your hosts, Josh Robb, and Austin Wilson.

Austin Wilson:

All right. Hey, hey, hey. Welcome back to the Invested Dads Podcast, the podcast where we take you on a journey to better your financial future. I am Austin Wilson, research analyst at Hixon Zuercher Capital Management.

Josh Robb:

I’m Josh Robb, director of Wealth Management at Hixon Zuercher Capital Management. Austin, how can people help us grow this podcast?

Austin Wilson:

You can buy us Christmas presents.

Josh Robb:

That’s right.

Austin Wilson:

No, we would love it if you would subscribe. If you’re not, subscribe. And we would love it if you would visit our website and sign up for our weekly newsletter to get notified every Thursday when our episode drops. And that email has a nice little synopsis of what’s going on, what we’re going to be talking about, and a link to listen right there. So, we would love it if you would do that. So, today, Josh?

Josh Robb:

Yes.

Austin Wilson:

It’s getting close to Christmas time.

Josh Robb:

It is.

Austin Wilson:

We’re moving towards the end of 2022.

Josh Robb:

Seeing lights everywhere.

Austin Wilson:

I’m starting to see lights. It’s crazy out there. So, we are going to be talking about nine-

Josh Robb:

Nine.

Austin Wilson:

Count them, nine Christmas spending statistics for 2022. These are statistics from the PwC or PricewaterhouseCoopers Holiday Outlook 2022-

Josh Robb:

We should have done 12 because I feel the 12 things about Christmas would fit better.

Austin Wilson:

I know.

Josh Robb:

Just think of three more.

Austin Wilson:

Three more on the spot, we’ve got to… Maybe those will come with our-

Josh Robb:

The 12-

Austin Wilson:

… at the end.

Josh Robb:

… days of Christmas.

 

[1:27] – Spending Levels Similar to Last Year

 Austin Wilson:

So, we’re going to give you nine statistics about spending in 2022 for Christmas, as well as our thoughts about buying gifts and Christmas spending in general. All right. Number one, holiday spending levels are expected to be similar to last year. So, this season, 2022, 35% of shoppers plan to spend more than they did last year, high-earning young shoppers. So, these are big spenders, typically skewing male living in metropolitan areas.

Josh Robb:

Now, that caught me because when I think of, and I’m going to generalize here, the better gift givers-

Austin Wilson:

They’re not men.

Josh Robb:

… I feel they tend to be-

Austin Wilson:

It’s not men.

Josh Robb:

… the ladies.

Austin Wilson:

Yeah.

Josh Robb:

They’re more thoughtful and actually think of more people that would benefit from having gifts. There’s a lot of people, the auxiliary friend, where they’re, “Oh, I have a gift for you,” and I’m, “I never would’ve thought of that-

Austin Wilson:

Never.

Josh Robb:

… Let me go look in my closet.”

Austin Wilson:

Not a chance.

Josh Robb:

Yeah.

Austin Wilson:

Yeah, we’re going to get to that.

Josh Robb:

But I do get that when they talk about big spenders, if you’re men living in metropolitan areas, you’re probably buying tech stuff. You get your apartment; you’re getting your big screen TV set up.

Austin Wilson:

You don’t need stuff for your house.

Josh Robb:

Yeah.

Austin Wilson:

Yeah.

Josh Robb:

That’s my thought is they got Oculus VR goggles and all the tech stuff.

Austin Wilson:

Yeah. Well, that goes into the fact that people are anticipated to spend more on themselves than the average holiday shopper, this group here, these men in metropolitan areas-

Josh Robb:

Who are on themselves-

Austin Wilson:

… because they’re, “Oh, yeah, I want some nice beats.”

Josh Robb:

I’m going to buy myself a Christmas present.

Austin Wilson:

Exactly. That’s such a funny concept, it really is.

Josh Robb:

Merry Christmas me.

Austin Wilson:

So, overall-

Josh Robb:

Do they wrap it?

Austin Wilson:

If I buy myself something… I don’t want to wrap it.

Josh Robb:

You need a wrap it, put under the tree.

Austin Wilson:

Like… Rap it?

Josh Robb:

Yeah, drop a beat.

Austin Wilson:

Drop a beat. So, overall, consumers anticipate spending an average of $1,430 on gifts, travel and entertainment.

Josh Robb:

That’s a lot.

Austin Wilson:

That does seem like a lot. This is very similar to the estimate of 1,447 they spent last year.

Josh Robb:

So, close, yeah.

Austin Wilson:

And that’s up over 20% from 2020 and up over 10% from 2019, which-

Josh Robb:

Yeah, makes sense.

Austin Wilson:

… 2020 was obviously-

Josh Robb:

That’s a weird year.

Austin Wilson:

… affected by the COVID pandemic.

Josh Robb:

With the supply issues.

Austin Wilson:

Yeah. And 10% over 2019.

Josh Robb:

Yeah.

 

[3:02] – High Income Households Spending More This Year

Austin Wilson:

There you go, there you go. Number two, growth in personal income primes a high-income consumer for a jolly holiday.

Josh Robb:

Okay.

Austin Wilson:

Okay. So, high income consumers probably going to be spending some money. So, higher income households whose purchasing power has increased in recent months as their personal incomes has grown, will spend considerably more this holiday than they did last year. Unlike middle- and lower-income households, their spending patterns over the last several months have remained unchanged despite inflation.

So, the more money that you make, the less inflation has really impacted you. So, you’re probably going to be quite gifty. Maybe you’ll get those extra iPhones for your kids, or whatever, this year. In fact, while holiday budgets for consumers at large remain essentially the same as last year, those whose household incomes are 120,000 and above will increase holiday spending by 15%. That’s a lot.

Josh Robb:

Yeah.

Austin Wilson:

So, they’re going to spend an average of $2,759 on gift entertainment and travel, which is close to double the $1,430 anticipated average.

Josh Robb:

What?

Austin Wilson:

Okay. Travel throws that number. I think that skews that number because if, let’s say you live on the other side of the country and you’re going to go home to visit your family, plane tickets aren’t cheap right now. So, I could see how that bumps your total cost up. You’re probably not buying $2,700 of gifts, but if you’re going to count travel, lodging, all that stuff, rental car, whatever you’re doing, that’ll add up to that back end of that deal. But still, that’s a lot.

Josh Robb:

That is the only reason I live so close to my parents.

Austin Wilson:

Let’s just save on travel.

Josh Robb:

It’s for money.

Austin Wilson:

Yeah. That’s not it at all. So, here’s an interesting statistic as well. Millennials, which you’re at the upper end of-

Josh Robb:

I am.

Austin Wilson:

… I found through this paper-

Josh Robb:

Are Gen Z?

Austin Wilson:

No, I’m a millennial.

Josh Robb:

Okay.

Austin Wilson:

I’m actually not even considered a young millennial.

Josh Robb:

Oh, yeah, you’re old.

Austin Wilson:

I’m in the middle of millennials, which I was shocked by.

Josh Robb:

Yeah, I’m on the high end-

Austin Wilson:

You’re an elder millennial.

Josh Robb:

Yes. I’m a grandfathered in millennial.

Austin Wilson:

Millennials are the only age group spending more this holiday season. So, it’s really millennials in that higher income bracket. Millennials-

Josh Robb:

And if you think, again, that millennial group, that pushes into 40 right now, which you’re heading into those higher earning years. So, I could see why you would be slowly-

Austin Wilson:

So, millennials are anticipated to spend 11% more.

Josh Robb:

Wow.

 

[5:38] – Brand Loyal Millennials Raise Spending Budgets

 Austin Wilson:

Yep. All right. Number three, brand loyal millennials’ bringing the shine. That’s what it’s talking about here. So, as in previous years, millennials, which has a wide range of numbers, 26 to 40-

Josh Robb:

Oh, boy.

Austin Wilson:

… you’re on the upper end-

Josh Robb:

I am.

Austin Wilson:

… I’m in the middle, 26 to 40, are primed to spend with an average budget of $1,823, which is 27% higher than overall consumers.

Josh Robb:

Man.

Austin Wilson:

And in fact, almost half or 48% expect to spend more this holiday season than they did last year…

Josh Robb:

Oh, wow.

Austin Wilson:

… compared to the 35%-

Josh Robb:

You said earlier, yeah.

Austin Wilson:

… of all age groups. That’s crazy.

Josh Robb:

So, they’re making up a big chunk of-

Austin Wilson:

Millennials are the ones who are going to be more spending.

Josh Robb:

Those are the spenders.

Austin Wilson:

They are also more likely to travel this year. So, 63% of millennials anticipate to travel for the season versus 47% of all consumers. Again, these millennials often reside in large metropolitan areas. They’re less likely to have to deal with the price of gas because they have shorter commutes or public transport or whatever, but they have traded up likely for higher paying roles in bigger cities and stuff like that in this job-seekers market we’re in right now.

So, six in 10 millennials, also fun note here, belong to a customer loyalty program, and 66% of a brand or retailer credit card, which influences online browsing by 77% in in-store shopping, 79%-

Josh Robb:

Ah-ha.

Austin Wilson:

So, they’re very brand loyal.

Josh Robb:

Yeah. And their use of cards make the-

Austin Wilson:

They use it for benefits.

Josh Robb:

… points them to where they’re going to be shopping.

Austin Wilson:

Exactly.

Josh Robb:

If I have an Old Navy credit card-

Austin Wilson:

They’re going to go to Old Navy.

Josh Robb:

… I’ll probably shop there, at least start there.

Austin Wilson:

And those are higher statistics than any other age group. Here’s an interesting statistic I thought-

Josh Robb:

Yes.

 

[7:07] – Thoughts on Receiving or Gifting Used Items

 Austin Wilson:

… I want to hear your opinion is, 53% of millennials, you and me included, will include resale or upcycled items in their holiday shopping lists versus 37% of all age groups. So, how do you feel about receiving or gifting used items?

Josh Robb:

Well, if it’s resale, I get it, because refurbished, there’s a lot of those now where they’re as good as new and you’re getting them from a reputable place. Your Best Buy has refurbished or Open Box stuff. I get that piece. But upcycled, I’m assuming that means you had it and you’re just giving it to somebody else?

Austin Wilson:

Yep.

Josh Robb:

Little iffy there. It depends on what it is. I could see if I am, let’s say, upgrading my watch, which is a Samsung watch, because I have a-

Austin Wilson:

Oh, so you want an Apple watch, so clearly, it’s an upgrade.

Josh Robb:

… Then, let’s say my daughter or son, they would really appreciate it, I could see gifting it to them, but I don’t know if I’d wrap it for Christmas and give it to them. I feel I would just give it to them.

Austin Wilson:

See, this is where I would be all for it. First of all, I buy a lot of my stuff used.

Josh Robb:

Yeah. Let’s just say, buying it used is different to me.

Austin Wilson:

So, I don’t have a problem with receiving a used gift. I would be all about re-gifting and giving things.

Josh Robb:

But don’t you call those “white elephant gifts”? Isn’t that what you do, you find someone in your house and you’re, “Here, have this.”

Austin Wilson:

I would be all about it and my wife would say I would not be allowed. That’s what I would say. It’s not a-

Josh Robb:

And it would probably depend on the item because again, if I had a mower that was great, in good shape, I could see gifting that to someone if they needed a mower and I was getting a new one. Certain things you can just say, “Hey, it’s there.”

Austin Wilson:

Right. Pair of shoes.

Josh Robb:

Used car.

Austin Wilson:

Used car?

Josh Robb:

I’m thinking of items that you wouldn’t mind receiving used.

Austin Wilson:

You already have four kids. You can adopt me and then we can talk about used.

Josh Robb:

I’m not giving them a car, but I’m thinking of items I buy that are used.

Austin Wilson:

I buy used cars all the time.

Josh Robb:

Yeah, but-

Austin Wilson:

Upcycled.

Josh Robb:

I guess you want to call them – from somebody else.

Austin Wilson:

Right.

Josh Robb:

But I’m not gifting those. So, maybe that’s a difference-

Austin Wilson:

All I’m saying is, if anyone who gives me gifts which-

Josh Robb:

It doesn’t need the tag on it.

Austin Wilson:

… it doesn’t need the tag on it. I’m not about-

Josh Robb:

Does half a donut, would that upcycle… I upcycled my donut, “Here you go, Austin.”

Austin Wilson:

Yeah. Or an open bottle of something. No, I’m not-

Josh Robb:

Food is different.

Austin Wilson:

Consumables might be different.

Josh Robb:

Yeah, that’s a little different.

 

[9:01] – Online Shopping Vs. In-Store Shopping

Austin Wilson:

Okay, number four, we’re going to talk about how people are going to shop and how they’re going to pay. So, while online shopping has continued to gain traction over the years, in-store shopping is holding its own as consumers seek that in-person holiday sparkle. So, this year consumers told us they’re going to do 57% of their shopping online, 43% in stores. I would to do 100% of my shopping online, 0% in the stores.

Josh Robb:

Oh, I miss that fun waiting in the long line to check out.

Austin Wilson:

I hate shopping so much. It’s not for me. Other people love it. It’s great for them. PwC started talking about consumers about holiday shopping in 2015, so this is going back seven years, cash was the preferred payment method.

Josh Robb:

Interesting.

Austin Wilson:

With 80% of consumers ranking, it among their top three choices. Now, today, a variety of contactless payment options have become very popular. That top spot goes to debit cards, actually. Now, 60% of consumers rank that their highest among the three choices, and credit cards and cash are then second and third. That’s surprising to me. I would’ve anticipated that most people would’ve said credit cards first.

Josh Robb:

Well, between debit and credit now, because even with debit cards you can still use some of that protection stuff, I wonder if that’s just more of a budgeting thing.

Austin Wilson:

It is. And it’s a smart thing for a lot of people. I just love me some rewards.

Josh Robb:

Yeah.

Austin Wilson:

That’s all I’m saying. Interesting that’s growing right now is this buy-now-pay-later thing-

Josh Robb:

Which is a credit card,

Austin Wilson:

… which is a credit card or-

Josh Robb:

Yeah, layaway.

Austin Wilson:

… some form of credit. You buy now, pay later, or you buy now, and you pay for it in installments. There’s a very popular… Affirm, I think, is a big one for that. So, that is gaining ground for sure. So, that was 5% that people use that in 2021, it’s going to be 13 this year. I have mixed feelings about that. I feel you can get into trouble if you don’t think about all the impacts of that and all the payments, you’re going to have to make on it or whatever. But done properly, if it’s zero interest, you can spread the expense across a couple months, which is handy.

 

[11:12] – Price-Sensitivity in Christmas Spending

Number five, waiting on the right holiday deal. It’s very important. So, inflation-weary consumers, because we’ve had a couple years of pretty high inflation, they are understandably price-sensitive right now, but not as much as they were last year in fact.

Josh Robb:

That’s interesting.

Austin Wilson:

This year, 65% said price ranks among the top three factors influencing their holiday spending. That was actually 75% last year.

Josh Robb:

Interesting.

Austin Wilson:

I would’ve expected it to be opposite. So, as these consumers navigate an economic environment that’s constantly changing, 74% are waiting for the best deals before they begin shopping, and they typically don’t expect to see those until November, which I haven’t really started Christmas shopping, so, rolling with that. 25% are going to start shopping in early November, however, most are going to wait until the Thursday through Monday of Thanksgiving weekend due to the majority of their holiday shopping.

So, Black Friday, an interesting thinking now, not as popular as it used to be. Doesn’t necessarily hold that appeal. In 2015, 60% of consumers said they would shop on Black Friday. That is only 20% now. Wow. Not near as popular.

Josh Robb:

I bet Cyber Monday-

Austin Wilson:

Cyber Monday.

Josh Robb:

… is really eating into that.

Austin Wilson:

The end of November does signal holiday shopping in consumers’ minds. That’s just when they typically try to do that. And only 17% are going to wait until after Thanksgiving weekend to do their shopping.

Josh Robb:

Too late.

Austin Wilson:

So, a lot of it is-

Josh Robb:

What percent waits till the week before Christmas.

Austin Wilson:

Thanks to Amazon Prime.

Josh Robb:

And then what percent of those are dads who forgot? Yeah. Or someone said, “Hey, by the way, you need to get some gifts”?

Austin Wilson:

Yeah. That’s interesting.

Josh Robb:

Probably pretty high number.

Austin Wilson:

Here’s an interesting statistic as well. Almost 75% of consumers, including 87% of baby-boomers are braced for higher prices and they’re actively bargain hunting.

Josh Robb:

There you go.

Austin Wilson:

That is the first five things we’re looking at this holiday season.

 

[13:13] – Dad Joke of the Week

Josh Robb:

I have a dad joke for you.

Austin Wilson:

Do you?

Josh Robb:

Are you ready?

Austin Wilson:

Bring it.

Josh Robb:

All right. Well, you know the Christmas holidays are great, but they also bring about the cold and flu season.

Austin Wilson:

Yeah. Oh, yeah.

Josh Robb:

So, I have a tip for you to help you stay healthy-

Austin Wilson:

Good.

Josh Robb:

… during the Christmas season.

Austin Wilson:

I need all the help I can get.

Josh Robb:

Yes. To avoid germs, make sure you use a lot of Santa-tizer.

 

[13:23] – Comfortability in Gift Delivery

Austin Wilson:

Santa-tizer, I love it, I love it. All right. Number six, show me proof of delivery. That’s the topic here. So, with pandemic-related restrictions easing and population immunity on the rise, consumers are more comfortable spending time in stores for their holiday shopping this year. Many are likely to go back to browsing in-stores as part of their ritual.

Retailers meanwhile have continued to beef up the infrastructure required for pickup options in the wake of the pandemic that forced their hand to offer online options and stuff like that. So, many have gratified that customers often end up buying more once they arrive to pick up an order.

Josh Robb:

Yeah.

Austin Wilson:

That’s original thinking there. Home delivery, the most popular option for online shopping, continues to get more sophisticated as consumers have become more accustomed to it and demand more options. So, when deciding between various online shopping options, they prefer those that offer proof of delivery, real time tracking, and flexibility on timing.

Josh Robb:

Yeah, the timing’s important.

Austin Wilson:

Timing is important.

Josh Robb:

If you’re going to work and they drop the package off at 9:00 AM and you left at 8:00 and you’re not coming home till 5:00, that’s a lot of time sitting on the porch for weather or someone who borrows your gifts forever.

Austin Wilson:

Yeah.

Josh Robb:

It always drives me crazy. So, I work all day, my wife is busy running around most of the day, running our daughter to school and whatnot, so there’s a lot of time where we’re not home. And if I buy something-

Austin Wilson:

When your ferocious dog is protecting your homestead.

Josh Robb:

My ferocious dog, Sampson, who’s 20 pounds, he has a lot of bark-

Austin Wilson:

20 pounds of bark.

Josh Robb:

He’s never bit anything. He’s a lover. But yeah, he would definitely protect the house. Anyway. There’s a lot of time we’re not home. So, if I order something or my wife orders something and it’s not a cheap item, you typically have to sign for it, and you have to be there. That is annoying.

Austin Wilson:

An adult has to be there.

Josh Robb:

Yeah. That is annoying to me because I can’t schedule it to be, okay, I need it to come at 5:30 or 7:30, or whatever. I can’t schedule that. So, typically, if they come, I’m not there, she’s not there.

Austin Wilson:

Then, you got to go somewhere around 5:00.

Josh Robb:

Or they leave you a little thing and you have to sign it and then they can drop it off the next day.

Austin Wilson:

I know, that’s nuts.

Josh Robb:

That’s annoying. We’ve got to work on this.

Austin Wilson:

I’ve seen the new one where they can put it in your car. Have you seen this?

Josh Robb:

I don’t trust that.

Austin Wilson:

Yeah. It was interesting.

Josh Robb:

I don’t trust that one bit.

Austin Wilson:

Yeah.

Josh Robb:

I would have a very empty trunk if that was what we were doing.

Austin Wilson:

That’s right, that’s right. Interesting statistic, 29% of young millennials, this is where I found this number, young millennials are 26 to 30. I’m no longer, I’m not a young millennial.

Josh Robb:

Count me in.

Austin Wilson:

I’m 31.

Josh Robb:

Young millennials.

Austin Wilson:

I’m a middle-aged millennial. You’re an elder millennial.

Josh Robb:

I am.

Austin Wilson:

So, 29% of young millennials are going to shop via smartphone this holiday season versus 22% for all age groups. I found that to be low. 29?

Josh Robb:

Well, the fact that they’re just slightly above “all age groups”, you figure, what’s the silent generation? There’s zero there, so-

Austin Wilson:

They can’t talk anyway.

Josh Robb:

Yeah. But you know what I’m saying that group there is zero.

Austin Wilson:

I know.

Josh Robb:

So, that pulls the whole stat down, but it’s 22 for everybody?

Austin Wilson:

Wow. I’m looking around our office in my head and we’ve got, what, 14, 13 people, or something like that. Every single person, every single person who I’m thinking about in our office is going to shop online on their phone this season, in my mind.

Josh Robb:

In your mind. I guess I could do it on my phone.

Austin Wilson:

Yeah.

Josh Robb:

Yeah.

Austin Wilson:

It’s easier.

Josh Robb:

I like a bigger screen if I’m comparing-

Austin Wilson:

You’ve got those elder millennial eyes?

Josh Robb:

Yes. If I’m comparing products, because I am bargain hunting, then I need to have a side-by-side.

 

[16:58] – Consumers Trust Brands Based on Values

Austin Wilson:

And number seven, consumers trust brands that reflect their values.

Josh Robb:

Ah-ha.

Austin Wilson:

So, since 2020 when trust became synonymous with health and safety, brand trust has figured prominently for consumers. So, this year, a remarkable 93% of consumers told PwC in this survey that it was at their top of mind during holiday shopping, similar to last year’s 92% and way over the 70% recorded in the year prior to the pandemic.

Josh Robb:

Okay.

Austin Wilson:

Almost 60% of consumers told PwC that brand trust is a very important factor in their holiday purchasing decisions, again, confirming what we’ve heard in the past. They seek relatable brands that reflect their own values of sustainability and purpose. Health-conscious millennials, for example, are more likely to support wellness brands than all age groups. So, 51% of millennials and 35% of all age groups. So, that’s health-conscious millennials.

Local brands are popular with all consumers, or in the case of national retailers, those who source locally. Consumers also want to know more about a company’s ESG effort, so environmental and social governance. So, to find out, more than 60% of millennials and Gen Z rely on social media for that information, which, as we know, is 100% factual and accurate all the time.

Josh Robb:

Interesting.

Austin Wilson:

I read that on the internet.

Josh Robb:

Yes. It was interesting to me that if you have an item in mind you want to purchase, and then you’re on your smartphone, like you said, shopping it, and you do a little search and you find out there’s six stores that are selling it at relatively the same price, it shows right up there on the top of your little Google search, then they’re going to go to the next step and say, “Which of these companies is the one I want to buy from?”

Austin Wilson:

Yeah.

Josh Robb:

Interesting.

Austin Wilson:

But here’s the kicker, and there’s no numbers on this, but suppose you were going to buy an iPhone and there are five retailers, you can look up the ESG statistics for all of them. The one with the 25% discount had terrible ESG scores.

Josh Robb:

Bad. Don’t buy it.

Austin Wilson:

Do you go buy it there or do you pay 25% more, or probably a couple 100 bucks, and you go with someone with a better ESG score.

Josh Robb:

That’s interesting.

Austin Wilson:

That’s a conundrum. I’d go for the 25% discount.

Josh Robb:

Yeah.

Austin Wilson:

ESG, future plug for a future episode, we’re going to have a dedicated episode about the fallacy of ESG-

Josh Robb:

Okay.

Austin Wilson:

Okay. Anyway, I digress, I digress. So, another statistic about this piece of trust of companies we’re talking about here is that 88% of consumers said when a company earns their trust, it also earns a recommendation to friends and family.

Josh Robb:

Yeah?

Austin Wilson:

88%.

Josh Robb:

Is that true?

Austin Wilson:

Yeah.

Josh Robb:

I guess I could see that. If I have a good experience and I trust a company, then I would be apt to tell people that that’s where I would recommend. I can see that.

 

[19:12] – Holiday Travel Increases This Year

 Austin Wilson:

Yeah. Number eight, holiday travel rides again. It does.

Josh Robb:

Yeah.

Austin Wilson:

So, pre-pandemic, roughly a third of consumers took holiday trips, mostly to gather with family and friends, some for a holiday getaway after months of sheltering in place for much of 2020, some even into 2021. However, more than half of consumers were up for traveling during their holidays last year, and the vast majority of that was by car.

Josh Robb:

Ah, yep.

Austin Wilson:

Similar patterns emerged again this year with almost half of all consumers, 47% planning to travel this holiday. Of that 47%, more than two thirds, are again planning to travel by car. This year, however, air travel has picked up again, as you alluded to earlier, with almost half of travelers of 46% are planning to fly, which is up from 40% in 2021 and 33% in 2020, which obviously was 2020.

Of course, many are going to end up using a combination of air and road travel for their final destinations. Those who plan to travel also are big spenders overall, which you also alluded to earlier, at an average of $2,441 this holiday season. They will spend in upwards of $1,000 more than the average consumer, probably for those plane tickets.

Josh Robb:

There you go. Yeah, it adds up.

Austin Wilson:

So, here again, millennials lead the way with 63% of millennials planning to travel.

Josh Robb:

That makes sense though because if you look at that bracket, they’re traveling back to their parents, right?

Austin Wilson:

Exactly. Yep.

Josh Robb:

I get it.

Austin Wilson:

Online booking sites, fun fact, are the most popular way to book travel with 45% of travelers and almost 60% of traveling millennials using them for their holiday travel plans. Big statistics. And that’s the way I travel.

Josh Robb:

Online bookings. What else do you do?

Austin Wilson:

Yeah, what do you do-

Josh Robb:

You go to the airline, you go to the desk and buy a ticket, paper ticket?

Austin Wilson:

Sounds horrible.

Josh Robb:

Paper tickets?

Austin Wilson:

We were watching Ted Lasso, great show. My wife’s hooked on it now too. Waiting on season three. Come on, bring season three is what I’m saying. Anyway. Spoiler alert.

Josh Robb:

Oh, boy.

Austin Wilson:

At the end of season two-

Josh Robb:

I haven’t got that far.

Austin Wilson:

Roy and Keeley are, they’re dating, and Roy offers to take her on a trip. He comes with two boarding passes for a plane ticket and she’s, “Are you sure they take paper boarding passes at the airport?” And it was funny because I can’t remember the last time I had a paper boarding pass.

Josh Robb:

The last time I had a paper boarding pass I can tell you was-

Austin Wilson:

1995.

Josh Robb:

No. When you’re flying with an infant on your lap, they require a boarding pass.

Austin Wilson:

True. Okay. So, I would remember mine. That would be 20-

Josh Robb:

But the last time I’ve had a paper, it’s been a while. But for that I do know, because they always say if you’re traveling with an infant on your lap, you do need to get a boarding pass, and you can’t get that on your phone.

Austin Wilson:

’18 or ’19, whenever. We took Juliana to Florida. And yeah, she was with us, and that was… She also went to Arizona. So we’ve had to do that twice. I like to take advantage of the under-two rule.

Josh Robb:

Yeah. Oh, man. Fly for free.

 

[22:28] – Gift Spending Ability Decreases Due to the Economy

Austin Wilson:

Fly for free. You can only do that for two years, so you might as well go for it. So, that is number eight, and number nine, finally, through the lens of the economy. Take the step back here. So, this holiday shopping season is especially challenging after months of economic geopolitical health concerns, even years that have affected consumers purchasing ability as well as retailers’ inventory and supply chains.

So, slightly more than half of consumers or 53% are concerned about inflation, which is up from 45% in 2019. Yeah, I think 53% seems lower than I would expect. I would expect three quarters.

Josh Robb:

Well, I would say even the higher income earners-

Austin Wilson:

No, I would maybe-

Josh Robb:

I would say a 100% of consumers are aware of inflation. That seemed like a low number to me though.

Austin Wilson:

However, as the factors causing inflation to show a bit of cooling in certain areas, consumer sentiment has started to tick up just a bit. So, while lower gas prices are likely to continue fueling the recent rebound in sentiment, because they’re a bit lower than they had been, which is good, purchasing power remains skewed towards those higher income households, especially in this inflationary environment.

If the labor market remains strong and inflation continues to ease, holiday spending could look okay. Could experience a bit of an uptick. For now, lower- and middle-income households are reporting a diminished ability to spend on discretionary goods and services and sometimes choosing to skip purchases altogether rather than buying less expensive alternatives. So, that’s interesting. Bargain hunting is going to be widespread this holiday season as is shopping at value retailers like Costco or-

Josh Robb:

I would even consider Amazon-

Austin Wilson:

Amazon is value. You get the same product, multiple choices on value.

Josh Robb:

I consider that a value shopping-

Austin Wilson:

You can buy refurbished or used on Amazon now, which I’ve actually done, and saves good money. So, statistic about this one, households with annual incomes of a 100,000 or above, which are accounting for roughly 47% of spending, are masking the degree to which the purchasing power has deteriorated.

Josh Robb:

Like you said, it’s less impact on that side. Yep, makes sense.

Austin Wilson:

So, that’s nine things we’re looking at this holiday season as it looks at consumer spending for Christmas. Now, we’re going to provide-

 

[24:47] – Wrapping Paper or Gift Bags?

Josh Robb:

There’s going to be number 10 so we have a nice even amount.

Austin Wilson:

Well-

Josh Robb:

Ready, Austin? No, I got one for you. Number 10, number 10.

Austin Wilson:

This is off-script.

Josh Robb:

And this is just an informal survey of you.

Austin Wilson:

Just me?

Josh Robb:

Wrapping paper or gift bags?

Austin Wilson:

If I had my way, neither, but gift bags are way easier than wrapping paper.

Josh Robb:

And reusable.

Austin Wilson:

Yeah.

Josh Robb:

All you need is that little fluffy paper. What do they call that stuff?

Austin Wilson:

I wouldn’t wrap anything if it was up to me.

Josh Robb:

So, I actually enjoy wrapping for my kids to open, but when it comes to convenience and especially birthday stuff, it’s-

Austin Wilson:

Oh, yeah.

Josh Robb:

…. just have some bags and reuse those things over and over. But Christmas, I actually go with the paper.

Austin Wilson:

Yeah.

Josh Robb:

It’s just fun for them.

Austin Wilson:

Does each kid have their own wrapping paper so then you can tell who’s is what without labeling them all?

Josh Robb:

Yeah, very easy.

Austin Wilson:

Yeah, that’s super handy.

Josh Robb:

That’s what Santa does at our house.

Austin Wilson:

Santa.

Josh Robb:

He’s so smart, he’s so smart.

 

[25:39] – Do Not Go into Debt to Buy Christmas Gifts

 Austin Wilson:

So smart. So, we’re going to provide some of our opinions and thoughts on Christmas spending in general, and I’ve got a couple that maybe you can piggyback on. Number one, I advise people not to go into debt to buy Christmas presents.

Josh Robb:

Yeah, that’s a good one.

Austin Wilson:

I think that’s an unwise move. Then you’re spending money for months to come and accruing interest on things. It’s unnecessary.

Josh Robb:

You’ve got to do the opposite of that is start saving ahead of time-

Austin Wilson:

Exactly.

Josh Robb:

… so that you have a chunk of money. Christmas comes same time every year, roughly.

Austin Wilson:

December 25th.

Josh Robb:

December 25th. It doesn’t change. So, you have time to prepare for it. It’s not a surprise, it’s not a surprise birthday party for Jesus. So, what you’ve got to do is start planning ahead of time.

Austin Wilson:

And have a budget.

Josh Robb:

January, start putting some money aside, and that gives you 11 months to prepare for that month.

Austin Wilson:

Say using round numbers, you anticipate spending say, and you should plan for this, $1,200 on Christmas-

Josh Robb:

That’s close to the average.

Austin Wilson:

That’s less than average. We want to spend less.

Josh Robb:

Yeah.

Austin Wilson:

That’s a $100 a month. You just, January, February, March, put it away. Don’t even think about it. Then, you’re already covered when Christmas comes.

Josh Robb:

Ready to go.

 

[25:29] – Thinking About Quality Over Quantity

 Austin Wilson:

Number two, quality over quantity. Don’t buy cheap crap. Don’t buy 10 cheap gifts when one really nice gift will suffice. The really nice gifts’ going to last a while, the cheap gifts are going to be thrown away.

Josh Robb:

They’re broken by the end of the day.

Austin Wilson:

Yep. Another one is, don’t buy Christmas presents out of obligation. You should not feel obligated to buy someone a Christmas present.

Josh Robb:

I do.

Austin Wilson:

I don’t. Now-

Josh Robb:

There’s a list of people that you’re obligated to buy Christmas presents for.

Austin Wilson:

No. When you feel obligated, you literally should talk to that person and say, “Hey, we don’t need gifts for each other.”

Josh Robb:

So, teacher gifts? And again, I feel obligated, and I’m happy to do it because I appreciate what they do. But the obligation is, the kids bring in a little gift. That’s an obligation I feel, but I think it’s a good one. And the other one, and this, I wouldn’t call it a gift, but I try to do a little something for the delivery guy or the mailman. Those I feel, I’m going to use the word “obligation” because I feel I should, and again, I don’t mind. So, a lot of times it’s something even like cinnamon rolls or food for the delivery guy.

Austin Wilson:

Your wife’s cinnamon rolls, oh, they’re pretty good.

Josh Robb:

But I would say I agree with you from that standpoint of people in your friend area, but there are some just responsibility that you feel, “I need to do this,” because it’s a social norm, but I also understand why.

Austin Wilson:

I’m even going to throw this out there and some people are going to perk up about this.

Josh Robb:

Oh, boy.

Austin Wilson:

They’re going to judge me.

Josh Robb:

Look out.

Austin Wilson:

But my wife and I really don’t often buy gifts for each other, because we get gifts from our parents or whatever and-

Josh Robb:

Then, she doesn’t talk to you throughout January, so…

Austin Wilson:

Yeah. But there’s no obligation. We just don’t do it. Or even our siblings, we have an agreement, no gifts for each other, we’ll buy gifts for the kids. It’s a pretty good deal. So, don’t feel obligated.

Josh Robb:

Yeah, gotcha.

 

[28:30] – Experience Gifts for The Holidays

 Austin Wilson:

Another thing is, it’s great to focus on experiences and not things.

Josh Robb:

I’m a huge fan of that.

Austin Wilson:

So, if you can buy, and I get the benefit of this too, because say Josh and I are brothers and I want to get you a gift, why don’t I get you tickets to a football game, and you know what, I get to go too.

Josh Robb:

I can go with you.

Austin Wilson:

It’s a great gift.

Josh Robb:

Example?

Austin Wilson:

Yeah?

Josh Robb:

We took my oldest son skiing as his Christmas present. We bought him ski goggles, but we also then said, “We’re taking you skiing.”

Austin Wilson:

Great gift.

Josh Robb:

Then, in February, on a day we went skiing just up in Michigan, nothing big, wasn’t a huge hill or anything, but first time for him, loved it.

Austin Wilson:

Absolutely.

Josh Robb:

He loved it. And for my wife and I, it was a great time for just the three of us to spend time and do something fun. I agree with you.

Austin Wilson:

Yeah. My parents are taking us and my siblings to a Broadway show in Columbus for a gift.

Josh Robb:

Oh, yeah.

Austin Wilson:

That’s a great gift because you know what-

Josh Robb:

Awesome. You’re going to remember that.

Austin Wilson:

… we’re going to remember it, we’re going to take pictures, we’re going to have a lot of fun. Tickets don’t take up space in your house and need thrown away-

Josh Robb:

Nope.

Austin Wilson:

… and don’t go bad.

Josh Robb:

Yeah, don’t throw them away.

Austin Wilson:

Exactly. So-

Josh Robb:

You don’t want to throw them away-

Austin Wilson:

Focus on experiences, not things. And another point that I think we could get better on as a culture is, ask parents before getting a gift for a child, because there may be duplicates, which are annoying, and it may just be something that they wouldn’t use. So-

Josh Robb:

Coordinate.

Austin Wilson:

Coordinate.

Josh Robb:

Yep.

Austin Wilson:

I think that that would be helpful because oh, my goodness, our house is just jack full of stuff, so much stuff for our kid. And we’ve got another one coming.

Josh Robb:

Yep. Oh, yeah.

 

[30:05] – The Importance of Budgeting Your Gift Spending

 Austin Wilson:

Josh, what are your thoughts on spending around Christmas?

Josh Robb:

You’ve got some good ones there. I’m just going to throw a couple more in. Budget.

Austin Wilson:

Budget.

Josh Robb:

You talked about not going into debt, but I think, like you said, there are people you’re going to be buying Christmas presents for. I to build out… I have a spreadsheet because-

Austin Wilson:

Oh, yeah.

Josh Robb:

But I to list all the people that we’re anticipating buying presents for, and then I have my budget and then we say, “Okay, how are we splitting that budget between this list?” So, it’s not, okay, we saved 100 bucks a month, we have $1,200, all right, that’s our family. Then, all of a sudden, oh, there’s 17 more people we need to buy present for. Now, I’m again going more than I planned.

So, you take your budget, plus you’ve got to divide that by the number of people. And it’s not equally divided, but it’s, who all do we need to buy gift for and split up-

Austin Wilson:

Favorite kids get more.

Josh Robb:

Yeah. So, that’s one. Two is, setting the expectations. And again, you and your wife, you set expectations. You say, “Hey, this year there’s nothing we really need. Let’s use that money for our kids,” or whatever. It’s just having that conversation. Even with the kids, if they are all marking Xboxes and PlayStations and Oculus headsets, you’re, “That’s a $14,000 Christmas list you got there, buddy.” It’s maybe having a conversation of what that looks like. So, understanding between everyone there.

Then, finally, I think keeping in mind the purpose of what the holiday season is and making sure that you are setting that example for your kids on what you expect the actual holiday to look like.

Austin Wilson:

Absolutely.

Josh Robb:

And always, like you said, with family, if you can’t travel to see them-

Austin Wilson:

Technology is awesome.

Josh Robb:

… Zooming, doing those type of things. I think that’s one of the big benefits of 2020 is you’re able now to connect a lot easier, especially with a generation that three years ago was probably a little more hesitant to do those things, now they’re all in. I would say that’s… The other cool thing is, find ways to connect with those other generations because they will appreciate it a lot.

Austin Wilson:

Yep. Well, that is some discussion around spending around the holidays from The Invested Dads, and we wish you a Merry Christmas and a Happy New Year and enjoy some time. Hopefully this message finds you well, and maybe you’re enjoying a travel to some family or who knows what that might be.

But thank you for listening, and please share this episode, if you enjoyed it, with friends and family, anyone who is asking about spending during the holidays. Again, I’d also love it if you’d subscribe or leave us a review on Apple Podcast or Spotify or whatever platform you listen to us on.

Josh Robb:

And remember, anything we mention today is not a Christmas present recommendation.

Austin Wilson:

No.

Josh Robb:

Find your own shopping list. But if you want to send us a gift, we’re not going to say no.

Austin Wilson:

Yes.

Josh Robb:

Well, I’ll have to document it as a compliance officer, but other than that-

Austin Wilson:

Remember that. All right, well, until next Thursday, have a great week. All right, talk to you later. Bye.

Thank you for listening to the Invested Dads Podcast. This episode has ended, but your journey towards a better financial future doesn’t have to. Head over to theinvesteddads.com to access all the links and resources mentioned in today’s show. If you enjoyed this episode and we had a positive impact on your life, leave us a review, click subscribe, and don’t miss the next episode.

Josh Robb and Austin Wilson work for Hixon Zuercher Capital Management. All opinions expressed by Josh, Austin, or any podcast guest are solely their own opinions and do not reflect the opinions of Hixon Zuercher Capital Management. This podcast is for informational purposes only and should not be relied upon for investment decisions. Clients of Hixon Zuercher Capital Management may maintain positions in the securities discussed in this podcast.

There is no guarantee that the statements, opinions, or forecasts provided herein will prove to be correct. Past performance may not be indicative of future results. Indices are not available for direct investments. Any investor who attempts to mimic the performance of an index would incur fees and expenses which would reduce returns. Securities investing involves risk, including the potential for loss of principle. There is no assurance that any investment plan or strategy will be successful.