How to Recover From Holiday Overspending
The holidays have come and gone, and your wallet is feeling a bit… light. Fortunately, you don’t need to be a personal finance guru to get your budget back on track. Follow these simple steps for overcoming holiday overspending, and learn how to make sure it doesn’t happen again!
Analyze Your Spending Habits
The first step in learning how to get back on track financially is identifying your spending habits. Did you get a little overzealous when purchasing gifts for loved ones? Or were all those decor sales a little too enticing? Get to the heart of the issue, and be honest with yourself. Once you’ve identified your weaknesses, you can begin to build on your strengths using the following steps.
Track Your Spending
Overspending during the holidays can happen when you don’t pay attention to the money coming in and out of your account. Keeping track of the cash you spend and ensuring that your withdrawals don’t exceed your income is a great step towards getting your finances back on track.
As an exercise, track your expenses for one month. Everything you buy, write it down. You could use an app, a spreadsheet, or even an old-fashioned notebook to do this. However you choose to manage your daily spending, stay consistent along the way. Any detours may only hurt you in the long run.
Make a Budget
Once you know what you’re spending each month, determine which expenses are absolutely necessary. Then, decide what expenses you can do without. After you’ve carefully thought through the non-essentials, consider creating a budget using the 50/30/20 rule. This rule breaks down your monthly spending into three categories:
- Living expenses and essentials (50%): This includes rent, groceries, utility bills, and public transportation.
- Financial goals (20%): This category will look different depending on your financial situation. It includes money you put toward paying down recently acquired holiday debt, as well as contributions to your emergency savings for unexpected expenses, retirement accounts, and investments.
- Discretionary spending (30%): This is the fun category that includes things like travel, eating out, and entertainment.
To create your categories and track your progress each month, consider using a traditional worksheet that you can fill out by hand or an app like Mint or GoodBudget. With these tools under your belt, you can get back on track in no time.
Plan for the Year Ahead
Holiday overspending can also stem from a lack of preparation throughout the year. If you’re determined to get your budget back on track — and keep it that way — start saving for the holidays in advance.
You’ve made your budget using the 50/30/20 rule. But when it comes to the “financial goals” pile, make sure to allocate a little extra cash each month towards holiday gifts, decorations, and anything else you typically overspend on around this time. By stashing this money away in advance, you’ll be less likely to overspend the next time around.
Think Outside the Box
Starting fresh with a new budget can feel a little daunting at first. From unexpected expenses and bypassing nights out with friends to hesitating when buying something you actually need, it’s easy to get a little discouraged. But that doesn’t have to be the case.
Get creative and think outside of the box when learning how to get back on track with budget. If you find that you need something essential, like furniture or appliances, look to rent-to-own options instead. And if you still want to enjoy life and make room for entertainment, seek out cheaper ways to have fun. You don’t have to sacrifice life’s small joys when getting your finances in order.
Get Back on Track with Rent-A-Center
Getting your budget back on track after the holidays takes a little discipline and smart-shopping know-how. Whether you need a new computer, a washer and dryer upgrade, or a replacement bedroom set, your budget goes further at Rent-A-Center. Shop online or visit your nearest location to rent-to-own the electronics, furniture, and appliances you need today.