Santa is gone, the decorations are down, and chances are, youâ€™re feeling the sting of your holiday spending. If it crept up on you, your budget is strained, and now youâ€™re worried about your finances, youâ€™ll want to come up with a plan to recover.
Step 1: Assess The Damage
Before anything else, you want to know what youâ€™re working with and how to fix it. Calculate your recovery amount.
Review your budget or bank statements from November and December, then pinpoint all of your out of the ordinary, holiday-related spending. Beyond gifts, these expenses might be:
- Travel to visit your parents back home
- Food you bought for Thanksgiving
- Drinks you bought at a holiday party
- Office Secret Santa gifts
These are just examples, but the point is: add it all up. Consider every expense that went beyond your budget or usual spending, then come up with a solid number that indicates how much youâ€™re in the hole.
Step 2: Find Ways to Cut Back
After youâ€™ve crunched the numbers and know what youâ€™re dealing with, itâ€™s time to rein in your current spending. You want to come up with a new budget, based on how much you need to recover (or pay off, if you went into debt).
Start by cutting back on your non-essentials. What discretionary expenses can you give up? Look for small indulgences you can nix while youâ€™re in recovery mode. This might be your Friday night sushi fix, your morning Starbucks run, or anything else thatâ€™s easy enough to cut. On the other hand, you do needsome breathing room in your budget, and yes, that means leaving room for the occasional splurge. Cutting your budget too thin is not typically a smart idea, but an emergency budget should only be temporary, and you can slowly add expenses back in as your finances recover (if you even miss them once theyâ€™re gone!)
From there, take on your fixed expenses. These are your monthly expenses that more or less remain the same. For example, your car insurance, cell phone bill, or Internet service. Find ways to save in each of these areas. For example, you might:
- Try to haggle a lower cable bill
- Switch your cellphone to a discount carrier
- Shop around for a cheaper car insurance rate
Look into cutting back variable expenses, too. Things like groceries, your electric bill, and gas. These tips might help you get started:
- Optimize your home for energy savings
- Consider carpooling or taking transit to the office
- Plan your meals carefully and grocery shop based on sales
You may have even received gifts in December that can help with some of these expenses: gift cards, extra cashâ€”even leftovers. Be resourceful and make the most with what you have. Cutting back frees up some of your money to use for recovery.