Surviving The Holidays: 5 Useful Tips To Get Your Finances Back On Track
Holidays. That time of the year when families reunite, lunches and mortarboards are carefully prepared, and gifts are exchanged. As the days go by and everybody returns to their busy lives, it’s time to sit at your desk and open the January bank statement. You immediately notice how many times the credit card has been swiped over the last few weeks, among all the toys, holiday nibbles, and last-minute gift purchases.
While this may not be the best post-holiday activity, it’s important to come to terms with your financial goals, find ways to get your money back on track, and avoid any further debt.
Read on to discover how to work out your financial situation after the holidays and to help keep your wallet full throughout the year.
Assess Your Current Finances
Once the wrapping paper has been thrown out it’s time to start assessing all expenses. have a look at your holiday one-time purchases, and by how much you went overboard during your shopping frenzy. Take a closer look at where you stood before the holiday season:
- What was your savings balance? By how much did it decrease, if so?
- By how much did your expenses increase during the holidays?
- What should your essential monthly spending look like?
- What immediate solutions should I take to cover all necessities?
Answering these questions will give you an initial idea of where your finances are standing and how to overcome any potential loss – retrieving your pre-holiday bank statements will come very helpful.
You may realize that cutting back on your spending for a while will be the best solution, at least until you regain control of your money outflows. Make sure you are prioritizing regular expenses such as a mortgage, rent, food, transportation, and utilities and that you are meeting your minimum card payment requirements or pay outstanding balances in full if you can.
After close examination, the faster you can eradicate your post-holiday debt, the sooner you’ll find yourself in better control of your finances.
Take Advantage of Returns and Unexpired Coupons
Few people are aware that holiday shopping can very well pay off. If you realized some of the items you bought are best to be returned or exchanged, you may still be on time to do so – don’t forget to bring the original receipt!
This is a good way to put some money back in your pocket and to get rid of gifts you don’t intend to keep. Watch out for the return window to avoid ending up with unwanted items that you cannot take back.
If you shop with a cash-back card, this is a good time to redeem any points or rewards you accumulated. You may end up with gift cards to use for your necessary spending.
Lastly, don’t forget to take advantage of coupon clipping – whether at grocery stores or retail shops. Saving money is very important at this stage, as it will help gain control of your expenses and refill your savings account.
Set Up a Fixed Allowance
Just because you are trying to save money after a big holiday shopping spree, it doesn’t mean you should entirely eliminate all spending. While this would be unrealistic, putting a cap on your purchases is completely within your power. Be mindful about the amount you do spend by setting up fixed amounts for each of your necessary expenses.
Much like traditional budgeting, this allowance will help you stay on track with essentials such as bills, rent, and food. To avoid further overspending, make sure you don’t go beyond these amounts, drawing only from the predetermined “allowance.” This will allow you to only use the money you can actually spend and see if you can indulge in small discretionary purchases on the next holiday season.
Limit Your Expenses
If you are in the process of paying off any extra debt you have accumulated during the holidays, it is wise to limit your expenses to a minimum. In other words, new credit card payments should be close to none. Instead, opt for carrying cash, at least until you’re back on your main financial plan. Paying through cash will help you “visually” see how much money is being spent, preventing you from making unnecessary purchases.
Try to restrict impulse post-holiday shopping, at least for a while. It’s easy to fall into the trap of some retailers, who will sell what’s left from the holiday period at much lower prices, making them more attractive to buyers.
In addition to the mental burden of managing debt, adding to your credit card balance will do you more harm than good. For instance, increasing your credit utilization rate or carrying an outstanding credit balance are all factors that will affect your credit score, so you want to try your best to minimize the damage.
Outline a Clear Plan
While this may sound obvious, creating a solid plan is crucial at this stage of money management. Make sure to outline your main goals, whether it be buying a home, a family holiday, retirement, and so on. This will help you focus on overcoming out-of-the-ordinary challenges like overspending on holiday shopping. Write down what you need to do to achieve those goals: saving more money? paying off outstanding debt? Ideally, you should try to stick with the 50/30/20 budget rule: use 50% of your monthly income to needs, 30% for discretionary purchases, and 20% for savings and debt repayment.
As you work on your plan, it would be wise to start preparing for next year’s holiday season as well. You may create a separate “holiday account” where you can deposit a few extra dollars each month. Once the holidays approach, start shopping in advance, taking advantage of seasonal sales (Black Friday and Cyber Monday) and free shipping offers to buy your gifts. Starting will also prevent last-minute purchases that may eventually add to the overall cost of holiday gifting.
Having a financially rough holiday season is normal and should not be a reason for panic. However, it’s important to get back on track as soon as possible to avoid the same situation the following year. Keeping an eye on credit card statements or holding off on post-holiday purchases is a great way to start re-focusing on your goals and future financial success.