With the costly holiday shopping season here and total spending projected to top $1 trillion, the personal-finance company WalletHub has released its 2025 Holiday Budgets by City report, complete with expert commentary.
To help shoppers avoid post-holiday financial strain, WalletHub analyzed more than 550 U.S. cities, factoring in income, age, and savings-to-expenses ratios to estimate the maximum holiday budgets consumers can reasonably afford.
Nine of the top 20 cities in terms of average holiday spending were in California. Texas put four in that top 20, while Massachusetts had three.
Cities with the Biggest Average Holiday Budgets
Palo Alto, California topped the list with an average holiday budget of $4,485. Next was Mountain View, CA ($4,266); followed by Newton, MA ($4,069); Flower Mound, TX ($3,941); Kirkland, WA ($3,866); Milpitas, CA ($3,702); Sunnyvale, CA ($3,691); Santa Clara, CA ($3,690); Redwood City, CA ($3,627) and, rounding out the top 10, Bellevue, WA ($3,603).
Ranked number 11 through 20 were Fremont, California, 11th, at $3,574; followed by Frisco, TX ($3,491); Livermore, CA ($3,439); Carmel, IN ($3,422); Naperville, IL ($3,366); Cambridge, MA ($3,347); Somerville, MA ($3,330); San Mateo, CA ($3,313); Pearland, TX ($3,277); and, at number 20, The Woodlands, TX ($3,265).
“Depending on the city, an American’s holiday budget this year can range anywhere from just over $200 to more than $4,000, taking into account residents’ income, their existing debt obligations and the cost of living. Regardless of how well-off you are this season, it’s important to stick to a budget that fits your financial profile so you don’t rack up unsustainable debt and end up in a bad position after the holidays. There are plenty of ways to enjoy the holidays and show you care without spending much money, like hosting potlucks or giving handmade gifts,” said Chip Lupo. WalletHub Analyst. “Palo Alto, California, has the highest average holiday budget, both among small cities and overall, at $4,485. Sunnyvale, California, has the highest holiday budget among medium-sized cities and the seventh-highest among all the cities in our study, at $3,691 on average. Finally, San Jose has the highest holiday budget among large cities, at $3,035 on average, though it only ranks as the 29th-highest among all the cities in our study.”
For the full report, visit: https://wallethub.com/edu/holiday-budgets-by-city/16912
Expert Commentary
What tips do you have to help people avoid holiday overspending?
“In terms of tips to avoid holiday overspending, create and adhere to a budget first and foremost. Stick to a practical wish list as well, recognizing that many companies rely on the Holiday season to earn profits. In doing so, retailers and manufacturers try to generate a lot of buzz and excitement about deals and offers. Sometimes these offers are legitimate deals, especially offers like doorbusters. These can help signal to consumers that there are great deals to be had, sending some folks into a frenzy of sorts. However, many times the average promotion is little more than an overhyped offer which is actually inferior to other sales held throughout the year. The consumer is sort of conditioned to think all the deals are the best of the year, but this might not always be true. If you know what you are looking for and understand typical price ranges, consumers can be better equipped to recognize when something is actually a ‘deal’.”
Patrick Fennell, PhD – Associate Professor, Kennesaw State University
“Create a holiday budget on your mobile phone or planner making sure to set an overall cap for the season. Create sub-budgets for gifts, food and entertainment, travel, and charitable giving, obligations to people you depend on – caregivers, teachers, etc. Factor in hidden costs such as work-related events and gifting, shipping, returns, taxes, etc. Avoid impulse purchases in response to promotions displayed on mobile phones or social media ads ... Manage debt and payment-plans carefully, especially when using ‘Buy Now, Pay Later’ or credit cards, making sure that future payments are recognized as current spending and reduce your budget for the season.”
Patrali Chatterjee, Ph.D. – Professor, Montclair State University
How do you think the current social and economic environment is influencing household holiday spending decisions?
“We are living in a bifurcated economy. The top 25 percent income households are largely insulated from economic hardship. The bottom 60 percent are finding life increasingly unaffordable. Everyone else in the middle is somewhere in between. In other words, our household holiday spending decisions are also becoming like A Tale of Two Cities. On one hand, the upper income households are likely to spend just as much as they have in the past, if not more so. On the other hand, the lower income households are struggling. The affordable luxuries that the middle class has previously enjoyed are likely to become increasingly unaffordable. As consumers rationalize what they spend, they will face the choice of whether to buy more lower value gifts or fewer higher value gifts.”
Yao “Henry” Jin, PhD – Associate Professor, Miami University
“We have parts of the economy that are booming and are fueling spending. The stock market is booming and that is creating a wealth effect on spending among many. On the other hand, utility bills are very high as power consumption is very high because of AI. Fortunately, gasoline prices are still under control. Insurance rates have shot up. Both #1 and #2 are affecting the ability to spend. Food prices have been high for a while so all this adds up.”
Jagmohan Raju – Professor, The Wharton School, The University of Pennsylvania
How can people show love and appreciation over the holidays without spending money on gifts?
“In a few words: memories last longer than gifts. Material wealth pales in comparison to emotions and memories. Personalization can add a lot of unique value to otherwise lower value gifts. For instance, gifting a crafting kit and then hosting a crafting party could create both fond memories and unique gifts that cannot be purchased elsewhere. Beyond anything material, making a positive impact on the community can also create fond memories while spreading holiday cheer ... Volunteering at nonprofits not only allows people to celebrate together but also assists those less fortunate.”
Yao “Henry” Jin, PhD – Associate Professor, Miami University
“Spend quality time with your loved ones. Write an actual old-style letter instead of just sending an email. Call your loved ones instead of texting. Holidays are not the only time to show love. Do it all year around please.”
Jagmohan Raju – Professor, The Wharton School, The University of Pennsylvania
