The $2,700 Tradition: Latino Holiday Spending Soars Amid Anxiety

CHICAGO, IL – December 03, 2025 – As the holiday season gets underway, a striking economic paradox is unfolding within America’s Latino communities. New data reveals that U.S. Latinos anticipate spending nearly $2,700 on average for the holidays this year, a staggering 30% increase from 2024. But this surge in spending is not a sign of newfound prosperity. Instead, it’s a powerful indicator of deep-seated cultural priorities colliding with intense financial anxiety, forcing families to make difficult choices about what tradition truly means.

A new report from the BMO Real Financial Progress Index, which surveyed thousands of Americans, paints a complex picture. While the dollar amount is rising, the way it's being spent is undergoing a radical transformation. Faced with the rising cost of living, families are strategically cutting back on cherished aspects of their celebrations—like travel and entertaining—to preserve what they deem most essential, all while financial anxiety climbs higher than in the general population.

"Family celebrations are central to Latino holiday traditions, but rising costs are forcing many to rethink their plans," noted Lizzy Diaz-Ortiz, Vice President of Hispanic/Latino Banking at BMO. The survey, she explained, serves as a stark "reminder of the economic pressure Latino consumers are facing right now."

Redefining the Celebration Budget

The data shows a dramatic reallocation of funds away from the festive trimmings of the season. Spending on entertaining and hosting parties is projected to fall to an average of $210, down sharply from $390 last year. The number of families hosting gatherings is also shrinking, with only 59% planning to do so compared to 68% in 2024. Even holiday decorations are on the chopping block, with planned spending declining and nearly half of families opting not to decorate at all.

Perhaps the most significant sacrifice is travel. For many Latino families, the holidays are a crucial time for connecting with relatives across the country or abroad. Yet, the BMO index found a precipitous drop in travel plans. Only 41% of Latinos will spend on holiday travel this year, a steep decline from 59% in 2024. For those who still plan to travel, the cost is immense, consuming almost $1,200—over 40% of their entire holiday budget.

These are not minor adjustments. Latino households are cancelling or altering travel plans at a significantly higher rate than the general U.S. population. For domestic trips, 44% of Latinos have changed their plans versus 35% of the total population, and 16% have cancelled entirely, compared to just 11% of the general populace. The primary reason is clear: nearly half (46%) cited that travel has become a lower priority than covering daily living expenses.

A Climate of Anxiety and Adaptation

The survey pulls back the curtain on a community grappling with heightened economic unease. Half of all Latino respondents reported feeling increasingly concerned about their overall financial situation in the past three months, a sentiment shared by a smaller 44% of the general population. This anxiety extends to the workplace, with 26% more worried about potential layoffs compared to 23% of the broader public.

This financial pressure is also reshaping shopping behavior, particularly in response to tariffs. A remarkable 71% of Latinos are actively changing their shopping habits due to tariff-related price hikes, compared to 62% of the general population. Their strategies are a mix of pragmatism and planning: 46% are shopping earlier to spread out the cost, while another 46% are actively seeking gifts minimally impacted by the new policies.

Yet, this story is also one of remarkable resilience. Rather than simply forgoing the holidays, many are finding ways to expand their budgets. The report reveals that 44% of Latinos have taken on a side hustle or extra work specifically to pay for holiday expenses, a rate notably higher than the 38% of the general population doing the same. It's a clear signal of a community determined to uphold its traditions, even if it requires significant extra effort.

A Divergent Signal for Business

For businesses, this data is more than a cultural insight; it is a critical market signal that demands a strategic response. While major retail forecasts from groups like the National Retail Federation and Deloitte project modest holiday spending growth of 3-4% for the general population, the 30% surge projected for Latino households tells a completely different story. A one-size-fits-all approach to holiday marketing and product offerings is destined to miss the mark.

This trend is not an anomaly. Previous research, including 2024 data from CivicScience, has consistently shown that Hispanic consumers are more likely to plan on increasing their holiday spending compared to their non-Hispanic counterparts. The current economic climate has simply amplified this dynamic, forcing a prioritization that is unique to the community's cultural values and financial realities.

Companies that fail to recognize this nuance risk becoming irrelevant. Pushing travel packages or high-end party supplies to a consumer base that is actively cutting those categories is inefficient. Conversely, understanding the heightened importance of core gifts and the need for value makes it possible to connect in a meaningful way.

The Digital Response: AI's Role in Financial Wellness

This is where technology and innovation become crucial. The complex behavior patterns revealed in the BMO index—high spending combined with high anxiety and strategic cutbacks—present a perfect use case for AI-driven personalization in both financial services and retail.

Financial institutions are moving beyond simple banking apps to offer AI-powered digital tools that act as personal financial coaches. BMO’s own SmartProgress platform, which offers budgeting and planning resources in both English and Spanish, is an example of this trend. The next evolution of these tools involves using AI to analyze an individual's spending patterns, identify areas of financial stress, and provide proactive, hyper-personalized advice. For a family struggling to balance holiday wants with daily needs, an AI assistant could suggest tailored savings goals, flag potential overspending in real-time, and recommend credit products or payment plans that align with their specific budget.

Retailers, too, can leverage this intelligence. By analyzing purchasing data, AI algorithms can discern that a family is prioritizing gifts over decorations and adjust their marketing accordingly. Instead of sending generic holiday flyers, they can offer targeted promotions on products that matter most, provide flexible payment options like 'Buy Now, Pay Later' at checkout, or create value-focused bundles that help a strained budget go further. This isn't just about selling more; it's about building trust by demonstrating an understanding of the customer's real-world pressures.

The BMO index is more than a snapshot of holiday sentiment; it's a strategic roadmap for any business engaged with this vital and growing segment of the American economy. Navigating the future of consumer engagement will require moving beyond broad demographic categories and using data-driven insights to respond to the nuanced, deeply human stories behind the numbers. The companies that embrace technology to listen, understand, and provide genuine value will be the ones to earn lasting loyalty long after the holiday lights come down.