Americans are expected to spend an average of nearly $2,800 during the 2025 holiday season, according to new data from the BMO Real Financial Progress Index. This marks an increase of more than $1,000 compared to 2024.
The survey indicates that 62% of Americans have grown more concerned about the cost of living in the past three months. Holiday-related expenses are also rising, with spending on miscellaneous holiday costs reaching $220 this year, up from $140 last year.
There are notable differences in anticipated spending among generations. Millennials expect to spend over $4,400—almost double the national average—while Gen X estimates nearly $2,500, Gen Z more than $2,200, and Boomers well over $1,600.
Paul Dilda, Head of U.S. Consumer Strategy at BMO, said: "The holidays this year come on the heels of a period defined by inflation and price volatility for everyday items, leaving many consumers confused and stressed as they plan for year-end festivities. Against this backdrop, shoppers are changing their behaviors – spending more in some areas, cutting back in others, and trying to build budgets that they can stick to over the holidays."
With the holiday season approaching its peak, financial pressure is increasing for many Americans. Nearly two-thirds (63%) say they are more concerned about inflation than three months ago; 57% report growing worries about import tariffs. These issues have led 62% to change how they shop due to tariff-related price uncertainty.
Financial anxiety is also prevalent: 53% say thinking about holiday spending causes stress. Parents with young children at home feel this most acutely (65%). Tariff-related uncertainty adds further strain; 63% who consider tariffs report increased stress.
To manage these challenges, Americans are adopting various savings and budgeting strategies. Seventy percent aim to stick to a budget this year; 45% plan to reduce other gift-giving throughout the year so they can spend more during the holidays. Younger generations are especially likely to save for holiday spending—58% of Gen Z and 56% of Millennials—compared with 47% of Gen X and just 25% of Boomers.
Cash payments remain limited overall (31%), but Gen Z leads with 34%, possibly using single cash withdrawals as a way to set firm limits on certain categories like gifts or dining out.
Popular strategies for saving money include shopping sale or clearance items (40%), buying less expensive gifts (37%), choosing affordable brands (33%), and reducing gift lists (24%).
Among those adjusting for tariffs (62%), almost half will seek gifts less affected by tariffs or make purchases earlier in the year; over a third will budget for higher costs. Of those not adjusting their spending due to tariffs (38%), two-thirds do not consider tariffs at all while one-third find it too confusing to plan around them.
Not everyone is cutting back on spending; many prioritize seasonal celebrations despite potential impacts on long-term savings. Fifty-seven percent say paying for their preferred holiday experience is important for mental health even if it affects their budget—a sentiment strongest among younger generations. More than half prioritize holiday plans like gift-giving and travel over saving money.
However, chasing sales can lead to overspending: Over half say pursuing discounts causes them to spend more than intended—especially among Gen Z (70%) and Millennials (68%).
Buy now/pay later services remain uncommon this season (11%), but past use is higher at 35%. Concerns about repayment are most pronounced among younger respondents.
Dilda added: "Balancing the cost of short-term celebrations with long-term saving goals is a serious financial challenge during the holiday season. This is why it's important to create a realistic spending plan to have the holiday season you want without impeding your real financial progress."
Groceries ($590) and travel ($490) remain top expense categories but travel participation has declined; only 40% plan holiday travel this year versus 45% last year. About one-fifth have canceled or postponed trips due to rising costs—often prioritizing daily living expenses instead or lacking funds after buying gifts.
For gift-giving, clothing leads planned expenditures ($250), followed by electronics ($220), toys/games ($120), entertaining ($210), dining out ($220), decorating ($110), and alcohol ($130).
Charitable giving averages have dropped from $290 last year to $250 this season even though more people intend to donate—56%, up from 51%.
BMO recommends building a detailed budget using resources such as its Real Financial Progress Hub and tracking expenses through digital banking tools like BMO Total Look. The bank also suggests using rewards cards such as BMO Escape Credit Card for travel benefits.
The BMO Real Financial Progress Index was created in February 2021 as an indicator of consumer sentiment regarding personal finances and progress toward financial goals. The latest research was conducted by Ipsos between September and October 2025 with a sample size designed to reflect U.S. census demographics.
BMO Financial Group is one of North America's largest banks by assets—with total assets reaching $1.4 trillion as of July 31, 2025—and serves customers across Canada, the United States, and select global markets.