As the most wonderful time of the year and all of the merriment comes to an end, you finally have to face the reality of your finances. You may have been good over the holiday season and stayed within the budget you made, even if just barely, or you may have slipped over the limit by a little bit. In either case, don’t worry too much and take control of your situation by making a “Holiday Recovery Budget” for the new year.
First Stage: Assess Your Finances
Before you determine your budget strategy, see what you have to work with. Answer questions like:
- How much money is in my bank account now?
- What are my monthly payments? Consider these and other similar payments you may have:
- Phone bill
- Car payment
- Tuition
- Rent/Mortgage
- Insurance
- How much do you spend on average in a month?
Your holiday spending may be an anomaly from your spending during the rest of the year. Look over how much you spent in the few months prior to the holidays. This will help you with your budget strategy.
- What’s your expected income?
Second Stage: Making Your Budget
Once you have all of the information that you need from your current finances, you can now set a realistic goal on your spending limit per month. Consider these expense categories and how much money each one needs a month:
- Mandatory expenses as mentioned in the first stage
- Groceries/Food
You can include just grocery expenses in this category or a category dedicated for anything you eat, including eating out.
- Travel
This category includes gas money and any other transit you may take.
- Savings
Once you have the amount of money for each living expense, you can determine how much money from what’s leftover to save. Set a goal of how much you want to spend during the holidays based on how you want to adjust your spending from this year’s holiday.
- Money just for you
This category is optional, but recommended because it can be hard to abide by a strict budget when every dollar is accounted for. If there is room to spare for personal spending, set aside that amount for guilt-free purchases that stay within your limit. It’s your money. You earned the right to treat yourself!
Stage Three: Sticking to the Budget
The hardest part of a holiday budget is sticking it to it for the whole year. It is much easier to think everything will work out like it did other months and ignore your limits, but sticking to your budget will be rewarding. You can prove to yourself that you can be a responsible spender and you’ll have enough money for holiday shopping.
One of the most helpful budgeting tips for the holidays is to try to opt for personal gifts over the big-ticket items. It means more to your friend or family member and the money you save can go towards your other needs (including money just for you)! Start off the new year expecting to struggle with your new budget, but be confident and stay strong!
