Can the holidays lead to compulsive overspending?

One in four people grapple with compulsive overspending during the holiday season, according to a recent study.

The survey of 2,000 Americans who celebrate a winter holiday examined some of the challenges and mental health struggles that can surface during the holidays — deemed the most financially stressful season of the whole year according to respondents.

More than half (56%) said they feel pressure to spend money during the holidays.
And the most common sources of pressure, according to findings, are from family (71%), friends (28%) and social media and pop culture (19%).

The research also found that more than three-quarters of respondents (76%) experience “money wounds” — emotional difficulties and distress resulting from financial challenges.

According to results, the most common money wounds are low self-esteem due to financial circumstances (26%), compulsive overspending (21%), shame arising from past financial mistakes (21%) and a scarcity mindset (20%).

And during the holiday season specifically, the most prominent and common financial issue is compulsive overspending (25%).

The study was commissioned by Beyond Finance, a debt consolidation company, and was conducted by Talker Research to uncover where money wounds come from and what experiences can lead to these poor financial habits and mindsets.

Respondents said that past financial mistakes (40%), not having enough money during their young adult years (34%) and being chronically in debt (25%) are the most common “money traumas” that result in financial stress.

And for those who experience money wounds, most (68%) disclosed that the repercussions hold them back from feeling fulfilled and successful.

Looking at how money-related stress can have an especially powerful impact during the holidays, over a quarter (27%) said they’re taken off guard when their money mindset challenges and bad habits resurface during the holidays.

And this year, more than six in 10 (61%) reported that they’re anxious about their finances this year for valid reasons.

"In my weekly therapy sessions with clients burdened by credit card debt, I regularly hear about the same challenges and mental health struggles highlighted in these survey findings, especially as they intensify during the holiday season," said Dr. Erika Rasure, chief financial wellness advisor at Beyond Finance. “It’s crucial to remember you’re not alone. Acknowledging these struggles and seeking support are key steps toward managing financial stress and finding peace."

The majority of those with money wounds (54%) admitted they find themselves hiding from and avoiding their money troubles during the holidays. This can look like refraining from buying gifts (37%), declining invitations to parties (33%) and avoiding checking bank account balances (29%).

Forty-two percent disclosed that they’ll become distant from others during the holidays, so they don’t feel “less than” or the pressure to spend money to fit in. But when becoming distant, respondents said they experience shame (38%), guilt (39%) and loneliness (40%).

To help combat this, most (61%) said they’re trying to live out the phrase “money and spending don’t equal happiness” this holiday season.

And as part of the healing process, over a quarter of those with money-related stress (27%) have brought it up to a therapist, life coach or mental health expert and 26% have worked with a finance expert to improve their financial habits.

In light of their experiences with financial stress, respondents said it takes, on average, six years for a money wound to heal.

However, a significant number (37%) reported they don’t believe that money-related trauma ever completely heals.

“As a company recognized for its innovative and compassionate approach to helping clients achieve financial freedom, this survey highlights why our focus on the deep connection between financial and mental health is so crucial,” said Lou Antonelli, chief operating officer at Beyond Finance. “The financial pressures of the holiday season can amplify money wounds, but by addressing these challenges head-on, we aim to empower people to break free from debt and build the lives they deserve.”

MOST COMMON MONEY WOUNDS
- Low self-esteem due to financial circumstances - 26%
- Overspending/compulsive spending - 21%
- Shame and guilt arising from past financial mistakes - 21%
- A scarcity mindset - 20%
- Financial anxiety even though there’s no financial threat or distress - 17%
- Avoiding discussions or thoughts about money - 16%
- Procrastinating on financial responsibilities - 15%
- Mistakenly feeling responsible for your family’s financial struggles - 15%
- Disagreements about money with your partner - 12%
- Extreme frugality - 10%
- Hiding money from your partner - 7%
- Hoarding money - 6%

AVOIDING MONEY WOUNDS DURING THE HOLIDAYS CAN LOOK LIKE
- Avoiding financial conversations with others - 37%
- Refraining from buying gifts for others - 37%
- Avoiding going into stores - 36%
- Not being honest with yourself that you’re experiencing “money wounds” and stress - 34%
- Declining invitations to holiday parties - 33%
- Avoiding online shopping - 30%
- Avoiding checking your bank account balance - 29%

Survey methodology:
Talker Research surveyed 2,000 Americans who celebrate a winter holiday; the survey was commissioned by Beyond Finance and administered and conducted online by Talker Research between Sept. 27 and Sept. 30, 2024.

We are sourcing from a non-probability frame and the two main sources we use are:
● Traditional online access panels — where respondents opt-in to take part in online market research for an incentive
● Programmatic — where respondents are online and are given the option to take part in a survey to receive a virtual incentive usually related to the online activity they are engaging in
Those who did not fit the specified sample were terminated from the survey. As the survey is fielded, dynamic online sampling is used, adjusting targeting to achieve the quotas specified as part of the sampling plan.

Regardless of which sources a respondent came from, they were directed to an Online Survey, where the survey was conducted in English; a link to the questionnaire can be shared upon request. Respondents were awarded points for completing the survey. These points have a small cash-equivalent monetary value.

Cells are only reported on for analysis if they have a minimum of 80 respondents, and statistical significance is calculated at the 95% level. Data is not weighted, but quotas and other parameters are put in place to reach the desired sample.

Interviews are excluded from the final analysis if they failed quality-checking measures. This includes:
● Speeders: Respondents who complete the survey in a time that is quicker than one-third of the median length of interview are disqualified as speeders
● Open ends: All verbatim responses (full open-ended questions as well as other please specify options) are checked for inappropriate or irrelevant text
● Bots: Captcha is enabled on surveys, which allows the research team to identify and disqualify bots
● Duplicates: Survey software has “deduping” based on digital fingerprinting, which ensures nobody is allowed to take the survey more than once
It is worth noting that this survey was only available to individuals with internet access, and the results may not be generalizable to those without internet access.