The holidays probably took a bigger toll on your wallet than you had expected. Don’t panic. This is normal.
Here’s how to start fresh in the new year with a reorganized budget:
1. Comprehensively assess your current finances.
Know where you stand by tallying credit card statements, tallying up recurring bills like phone bills, rent, heating, etc.
Focus on paying back credit card payments, as these interest rates can be the most taxing. Pay off higher-rate credit cards first. The 50/30/20 budget comes into play here: 50% of your monthly take-home should go to needs like rent and food, 30% to wants like dining out and entertainment, and 20% to savings and repayment of debt. If the debt is higher than 20% would allow for, borrow from the “wants” category.
2. Implement strict spending cuts.
Take a deep breath, put your credit card away, and don’t make any non-necessary purchases for the near future. Clearance items and post-holiday sales are tempting, but they’re not in your best interest at the moment.
3. Return gifts (sorry, Mom) and redeem points.
If you don’t intend to keep a gift, there’s nothing wrong with returning it for cash value. Return windows don’t last forever, though, so act quickly.
Use cash points you may have accrued from holiday shopping with credit cards. These can go toward things like groceries and gas.
4. Set a limit on your monthly expenditures.
You can’t spend $0, but it’s possible to work within a tight budget. Give yourself a set allowance and make every effort to stick within it. If you and your significant other share expenses, create two allowances so that you’re not breathing down each other’s necks about eating expensive food or buying tickets to a concert.
5. Have fun with it.
Money stress is patently not fun, so why not try to reframe it? Challenge yourself to only spend a certain amount and to save what you don’t spend. This keeps you more engaged with your finances and puts you in a positive mindset to make things better.
Work Cited
Jespersen, Courtney. “5 Tips to Get Back on Budget After the Holidays.” NerdWallet, 14 Dec. 2019, https://www.nerdwallet.com/article/finance/5-tips-get-back-budget-holidays.
