You’re in line at a major retailer with an armful of holiday gifts for your loved ones. The cashier rings you up, tells you the total and asks how you’ll pay: Cash or credit?
If you’re a credit card-holding millennial, you’re more likely to reach for that card than cash, especially during the holiday season, a recent study from CreditCards.com found.
More than half of millennials —those born between 1981 and 1996 —with credit cards say this time of year and the costs that come along with it make it OK to add more debt, the study found.
Of millennials included in the survey, three in five said they would be willing to “go into the red” with their spending.
It’s a trend that isn’t surprising to Barbara VanderWerf, a local financial planner and assistant professor of business at Palm Beach Atlantic University. This isn’t the first study to show how friendly millennials are with debt.
“It’s a way of life, and it’s been normalized for them,” she said.
Why? Millennials have been “saturated” with targeted ads for nearly their entire lives, and were the first generation to experience that, VanderWerf said.
“All they have to do is Google something” and be bombarded with ads, she said.
Millennials also entered the workforce around the Great Recession, at a time when wages were stagnant and the demand for labor was weak, VanderWerf said. That led many to pile on debt to make everyday payments.
Millennials also lack some basic financial know-how, she said.
“They just don’t know,” VanderWerf said.
But, she added, “The pendulum is swinging on that.” The next generation, known as Gen Z, is heading to college with more financial preparation, she said.
So how to avoid racking up credit card debt during the holidays?
VanderWerf suggests having a plan, whether it’s a fund you add to throughout the year or a seasonal job.
The key is to keep in mind that there are other ways to show how much you care, VanderWerf said.
“You don’t have to take on more consumer debt to prove to someone you love them,” she said.
5 holiday gifts that won’t break the bank
Go the “old school” route and do a gift exchange where participants draw names from a hat.
Give a “gift of service,” such as a coupon or gift certificate that commits you to babysit, wash a car, clean a house or even help with laundry.
“Give memories.” VanderWerf said this can include recording a heartfelt video, writing a thoughtful letter or creating a family recipe book. You also can give a framed photo of you and the gift receiver.
Regift. It might seem tacky but that sweater you got from Friend A for your birthday might be just the thing Friend B has been looking for.
Gift the gift of time. There’s nothing wrong with telling a friend you’re trying to save money, and then asking how they would like to spend some time with you, VanderWerf said. Especially for friends and loved ones you may not be able to see often.
4 ways to bring in a little extra cash during the holidays
Bank some overtime pay, if you’re an hourly worker.
See if a business near you is hiring temporary holiday workers. Most retailers bring on extra help from November through January.
Sell something that you don’t need or that doesn’t bring you joy.
Commit until Christmas to be on a spending freeze. Whenever you want something —a latte, fast food, a bag of M&Ms —take that money and instead put it in holiday spending fund.