January can be a difficult time of the year. The festivities of the Christmas season are over, and it’s back to reality for many of us who enjoyed an extended vacation or stay-cation. January is also the time that you may realize “Whoops. I spent a little too much on Christmas gifts and outings.”
The Christmas season can be a big hit on our wallets– even for those of us who may have budgeted for it. I don’t know about you, but I felt like this season’s shopping was out of control compared to previous years. Stores were open for all-night shopping events, and I was constantly being bombarded with sales advertisements from every venue – radio, television, emails you name it, I saw it or heard it. 50% here. 60% there. Sales were everywhere. And therefore, even the most budget-conscious shopper may have succumbed to the temptation of a good sale even after Shanti Ray gave us tips on managing our holiday spending in her November post.
So if you gave in to shopping lust, you need to get over Buyer’s Remorse because what’s done is done. Instead of focusing on how much you may have overspent, focus on the future by creating better money habits.
Here are four actionable steps that can help you get back on track financially.
Create a Budget. The word “budget” can have negative connotations because it is often looked at as not being able to buy what you want or do “fun” things with your money. But a budget doesn’t mean that. A budget is just a spending plan for your money. It’s a way to allocate how your hard-earned money should be spent ahead of time which helps control impulse shopping.
A budget should also be a flexible document that changes depending on what’s going on in your life. If you know you have a wedding coming up in four months, don’t wait until the last minute to think about putting money aside for a gift or travel expenses. Budget for events early to avoid being tight on money when the time arrives. If you already have a budget, review it to make sure that it still fits your financial goals, and if it doesn’t, tweak it so that it reflects your current situation.
I recently completed Dave Ramsey’s Financial Peace University, and one of the tips he offers is to create a zero-balanced budget. Which means your income minus the expenses should equal to zero on paper. His method ensures that every dollar is accounted for. Because if you have money left over, you may be tempted to spend it frivolously. This may be difficult to do at first, but it will eventually get easier with practice.
Give the credit card a break by leaving it at home and using cash for purchases. If you’re like me, I hate having a lot of cash on me. But if I know that I’m going out, I will carry what I allocated based on my budget, and once I’ve spent my cash, that’s it. No running to the ATM machine to get more. Also, if you use your credit card for rewards points or cash back, try to find a debit card with those benefits.
Distinguish between needs and wants. Use your budget to identify your necessities. Do you need that $150 dress? Or do you want it? Don’t buy a new outfit before you allocate money to pay your home expenses or other financial obligations such as student loans or car payments. After identifying your needs, budget for them and set aside some money for savings. If you still have money left over, sleep on that new outfit for a night to make sure you really want it and that it’s not just an impulse buy.
Get an accountability partner – someone who is honest and supportive of your financial goals. Sometimes it’s easier to overspend when you’re going out with a group of people because you don’t want to say no or you may feel pressure to keep up with everyone else. If so, you need someone who will tell you that you don’t need to buy another pair of shoes – at least not right now. Make sure your AP is someone you can trust to give you money advice and who will be brutally honest with you.
Here are two resources that I use to keep my finances on track:
- Mint is a free online personal finance manager.
- Petra’s Monthly Budget Spreadsheet ( E-mail me: firstname.lastname@example.org)
If you need more information on creating a financial plan, visit the following websites to get advice from CPA and Dillard University’s Accounting Professor Kemberely Washington and Finance guru Dave Ramsey.
I want to Hear From You:
- What holiday spending traps having you fallen into?
- How do you handle the after Christmas sales?
- What tips do you have to manage your money?