Now that the holidays are over, you may be avoiding looking at your bank account — and for good reason. According to the National Retail Federation, consumers said they would spend an average of $1,007.24Opens a new window during the holiday season this year, up 4.1 percent from the $967.13 they said they would spend last year.
Unfortunately, there are few do-overs once the presents are unwrapped. But you can look forward and learn how to tackle your overspending habits in the new year. Here’s how:
Why now?
It’s always a good time to try and curb your spending habits, but the new year represents a fresh start. “Most people get gluttonous with their spending at the end of the year. That leaves you in a bad financial position come January, making it a necessary time to get your money back on track,” says Brynne Conroy, owner of Femme FrugalityOpens a new window. “With all the energy of New Year’s Resolutions floating around, honing your self-improvement intentions towards your finances has the potential to set you up for success — as long as you don’t give up due to lack of progress come February.”
Take stock
Dr. John Karaffa, owner of ProSport CPAOpens a new window and author of Touchdown Finance, Personal Finance Tips from the ProsOpens a new window, says you need to first take stock of all of your income and assets so you know what you have, what you owe and what you can afford to spend. “You can’t make realistic goals if you don’t know [what’s coming in and what’s going out],” says Karaffa. After that’s been established then you can make a budget. “What are your real needs versus your wants? Ditch the keeping up with the Joneses mentality because they may be in another earning stratosphere than you.”
A new Sunday morning routine
“Reviewing your big goals regularly helps frame why you may want to spend less in those areas where you traditionally overspend,” says Jesse Mecham, founder of You Need A BudgetOpens a new window. He suggests that each Sunday morning you take a few minutes to look at your big goals like paying off a credit card, saving for a vacation, or bumping up your retirement funding. “You don’t spend less just because you “should”, you should be spending less because you want to use that money elsewhere even more. Make yourself regularly aware of that fact.”
Re-label it
Finally, here’s one more unlikely tip to help with overspending. “Stop seeing it as overspending,” says Mecham. “If you’re using a zero-based budget, you’re not overspending, you’re just reallocating where you’d like some of your finite dollars to go,” says Mecham. Have your priorities changed and your spending now needs to match it? Great, then adjust your budget accordingly. “That’s not overspending and you shouldn’t feel guilty about it,” he says.
