The holidays are supposed to be magical, but for American families this year, they're looking more like a budgeting nightmare. Nearly half of US parents expect to have an uncomfortable conversation with their kids about why Santa can't deliver everything on their wish list, according to a recent Intuit Credit Karma survey.

It gets worse. About 47% of parents worry their children will feel shortchanged when they compare their haul to what their friends received, and 52% are anxious they aren't creating memorable enough holidays. The parental guilt is real, and it's expensive—two-thirds of parents are pivoting to "practical or necessary gifts" to keep costs manageable, while 45% are prepared to go into debt just to make their kids happy.

The Financial Squeeze Extends Beyond Parents

This isn't just a parenting problem. Just under half of all Americans are stressed about holiday finances, and 39% feel trapped into spending more than they can realistically afford. The pressure is particularly acute for younger generations, with 51% of Gen Z and 50% of Millennials saying they feel compelled to break the bank during the holidays.

"Don't be afraid to communicate openly with friends and family about your spending limits, and explore creative, budget-friendly ways to celebrate," Courtney Alev, consumer financial advocate at Intuit Credit Karma, said in the statement announcing the survey results.

Starting the Holidays Already in the Red

Here's a big reason why everyone's panicking: 40% of Americans are heading into the holiday season already carrying debt. Nearly a third of US adults are juggling $5,000 or more in existing obligations, which doesn't leave much room for festive splurging.

When you're already underwater financially, every holiday purchase feels like a gamble. But it's not just personal debt creating anxiety. Broader economic factors are weighing heavily on consumer psychology. Rising prices and import tariffs are making shoppers nervous—a third of Americans cited economic uncertainty and the desire to save money as major reasons for adjusting their holiday spending plans. Another 27% blamed lack of income or reduced earnings for forcing them to recalibrate.

Tariffs, in particular, have become the boogeyman of holiday shopping. A staggering 81% of survey respondents are worried that import duties could drive up holiday costs, adding another layer of stress to an already tense shopping season.

How Americans Are Adapting Their Shopping Strategies

Faced with financial constraints, American consumers are getting creative about how they approach holiday gift-giving. The survey identified several popular money-saving tactics shoppers are deploying this year:

• Shopping sales more aggressively (36%)
• Cutting back on discretionary spending (32%)
• Using loyalty programs and rewards points (31%)
• Shopping at discount stores (29%)
• Cutting down gift lists (28%)
• Not traveling or traveling less (19%)

More than a third of consumers have already started their holiday shopping as a cost management strategy. Of those early birds, 44% wanted to spread out the financial impact over time, while 37% were trying to get ahead of anticipated price increases.

Beyond tactical shopping adjustments, many Americans are rethinking what they give entirely. Alternative gift choices are gaining popularity as people look for ways to show they care without emptying their wallets:

• A "one gift" rule (31%)
• Homemade gifts (29%)
• Gifting experiences, like tickets to an event, concert, or trip (24%)
• Gifting necessities like household items, subscriptions, or groceries (22%)
• Charitable donations (14%)

The shift toward practical gifts and experiences over material goods might actually be a silver lining. Sure, it's driven by financial necessity, but it also represents a potential recalibration of what the holidays are supposed to be about. Then again, try explaining that to a seven-year-old who wanted the latest gaming console.