The day after a holiday party, you might wake up with pleasant memories of an evening spent with friends--and a bit of a hangover. The weeks after the holiday season are over can feel very much the same way for your bank account. All that gift buying might have left your wallet feeling a little light. If that’s the case, here are a few ways that you can get back on track in the new year. Even better, we’ll help you avoid getting into the same spending trap next year with a few simple preparation strategies.
Do a holiday post-mortem
Before moving ahead with the new year, it’s important to look back on what worked and what didn’t work this past holiday season. Since you probably spent money at multiple places over a longer period of time, take some time to calculate how much you spent in total. Evaluate how much you spent in cash and how much you put on your credit cards. Make note of gifts that you know people loved versus gifts that received a lukewarm reception.
In addition to gifts, think about what else you spent money on over the holiday season. Did you go to any functions or performances? Host any parties? Think about which ones you enjoyed the most and which ones you could do without in the future.
Create an action plan for next year
Now that you have a good idea of how much you spent on holiday gifts this year, you’re in a better position to create a budget for next year. Realistically, do you think you’ll spent more or less next year?
According to the National Retail Federation, consumers planned to spend an average of $967 for decorations, candy and gifts during the 2017 holiday season. Since holiday spending is usually significant, one way to avoid the holiday debt cycle is to open a Club Account which you can send small amounts of money to throughout the year. By next Thanksgiving, you’ll be ready for those Black Friday sales!
Bonus tip: if you know you’ll need more decorations, supplies, gift wrap, or other seasonal items next year, purchase them immediately after the holiday season while stores are trying to eliminate their inventories. Getting these items on sale may mean spending in the short term, but they’ll save you money next year.
Snowball any debt away
If you’ve accumulated any debt over the holidays (or in general), you’ll save money on interest by paying them down using the debt snowball strategy:
- Begin by listing out each account’s balance, interest rate, and minimum monthly payment.
- Pay the minimum amount on each card, but pay as much as you can toward the card with the highest interest rate.
- Work your way backward until all of your cards are paid off in full.
Put those gift cards to work!
Did you get any gift cards over the holidays? Rather than spending them all right away or leaving them to collect dust, create a plan to use them wisely.
Begin by listing out each retail location and the value of each card. Decide if they can go toward necessities, luxuries, or if you can save them for next holiday season. Cards that fall into the third category can be stored away for now and used for gifts or as gifts later in the year.