The holiday season seems to begin earlier and earlier with each passing year, and the associated expenses that come with them are sure to follow. But what happens after the wishbone’s been snapped and the presents have all been opened? The National Retail Federation reports that the average American will spend about $967 on Christmas, Hanukkah or Kwanza this year, between gifting, feasting, and other holiday expenses. Are you one of them? If holiday expenses have left your accounts depleted, here are some tips to help you get your finances back on track in the new year.
Before you can determine where you’re headed financially, you need to have a solid idea of where you are now. Don’t be afraid to look at your finances, especially after big expenses. You need to know how much you have to start with, your monthly income, your monthly expenses, and exactly where your money goes in order to make a working budget or modify your current budget.
To find out how much money you are clearing each month, add up all of your household income, and subtract your monthly expenses to see what is left. Mint is a handy app that can help you categorize and track your monthly expenses, and even set reminders to make sure all your bills are covered. It may help you better forecast your needs so you don't have to rely on the financial boost of a title loan later.
Too often, people on a tight budget after the holidays find themselves in a cycle of minimum payments and missed payments, which worsen the situation with the added cost of late fees and higher interest rates. This can also damage your credit, which will cost you more across the board. A title loan is a good option to keep in your back pocket if you’re strapped for cash now, but you need to have a solid plan in place for repayment, which means working it into your budget.
You may need to make some adjustments to your regular spending to bounce back from the holiday season. The first step is to set aside some time and money to start untangling your finances. Don’t have a monthly budget already? It’s never too late to start. For many novice or first-time budgeters, the 50-20-30 method is a great way to start taking back control of your finances.
The 50-20-30 rule dictates that 50% of your income should go toward essentials (food, housing, and utilities), 20% should go directly toward savings, and 30% should go toward discretionary spending. This is a great jumping off point that helps you visualize the 3 basic needs of your budget and gives you some simple ground rules for your monthly budget.
If you’ve exceeded that 30% mark for discretionary spending this holiday season and your debt is starting to cut into your ability to save, simply redirect that money until you’re caught up. Make sure your essentials are still covered and focus your efforts on getting your credit cards back down to a $0 balance. Once your debt is managed, you can go back to being a savings powerhouse and even treat yourself to something special as a reward.
If you’re still in the red after reigning in your finances, there are plenty of ways to make money during your free time. All you need is a little help from the worldwide web. Set aside some time to check out what’s available – you probably have more options than you realize.
Maybe you can cash in on your vehicle by driving for Uber or Lyft. Perhaps you’re responsible and a natural caregiver – you can dog-walk or pet-sit through Wag!, or Trusted House Sitters, and babysit with Care.com. Check out Google and the app marketplaces to see all the different options and you might end up finding a permanent side-hustle.
If your accounts aren’t prepared for the holidays, you’re definitely at risk for over-spending and going into debt again. If you fail to prepare, you’re preparing to fail, so why not start getting ready for next year sooner than later? Look back at what did and didn’t work this year to improve your budget accordingly. Maintain your budget and keep the balances on your credit cards low so you have space on your cards when you need it.
Whether the holidays are 8 weeks or 8 months away, it’s never too early to start saving. Perhaps you’ve heard of The Envelope Method, where you split your money up into different envelopes according to your needs. Mvelopes is a useful way to do the same thing electronically. Set aside the parts of your holiday budget: $100 for decorations, $100 for a feast to remember, $200 for gifts, and still save $500+ over the average shopper. Why not try it for free for 30 days and see if it’s for you?
Black Friday sales are great for getting some pretty amazing deals on the season’s hottest items, and many Cyber Monday sales spill over into the month of December, but that doesn’t mean you should leave holiday shopping for the holidays. When you spread out your holiday expenses, you can take advantage of deals and bargains year-round. If you found these tips helpful, check out these tips for preparing your finances for next holiday season, too!