When people say it’s the season of giving, what they really mean is it’s the season of spending.
A little splurge at the end of the year doesn’t hurt anyone. But after swiping your card and clicking “proceed to checkout” all month long, it’s easy to fall into this habit of spending.
If you’re concerned that your holiday spending style will have a lasting impact on your finances, check out these tips to help you cut your costs in the new year.
Pack up Your Credit Cards
Once the festivities are over, you probably have plans to take down the tree and put away the lights, but these aren’t the only things that need to go into storage. Your credit cards need a break after their busiest time of year.
It’s good to remind yourself right about now that a credit card is just like a consumer loan, in that you’re expected to repay every dollar that you charged to this account, plus interest and fees. And for those of you asking what is a consumer loan, it’s any personal loan you may take out to afford a big purchase or cover an unexpected emergency.
By putting your credit cards in storage, you can focus on paying them down without adding to your debt. Do this by making more than the minimum payment. Budget so that you can pay as much as you can against your balance, as this may help you pay off your debt faster, reduce interest, and free up your credit limit.
Track Your Spending
After the hustle and bustle of the holidays, it’s easy to point the finger at big-ticket items that tip your budget into the red. Something like a brand-new smart TV for the family objectively takes up more money.
However, once the festivities wrap up, your budget may still be unbalanced even after you stop purchasing impressive gifts. That’s because smaller, everyday expenses can easily escape your attention.
A subscription meal box, banking fees, and signing up for Disney+ on top of your other five streaming services may all come in under $50 a month, but together they can rival the price tag of your biggest gifts.
Track your spending to see where your cash goes each month. Not only will this reveal any bad habits you have, but it also makes you accountable for every dollar that leaves your hands. Once you know where you’re going wrong, you can make changes to free up more cash.
Find More Savings in Fixed Expenses
Fixed expenses are the regular bills that fill your budget, including housing costs, groceries, utilities, and even installment loan payments. Compared to the small, voluntary purchases described above, it’s easy to see these expenses as something you can’t change or eliminate, but this is a common misconception about your budget.
In reality, you can find ways to say on these regular expenses if you know where to look.
Take, for example, your utility bills. Lowering your thermostat by 7°-10°F for 8 hours a day from its normal setting could save you as much as 10 percent on your annual heating and cooling costs.
Bottom Line: Don’t Get Used to the Holiday Lifestyle
The holidays represent a time when it’s acceptable to overindulge — from tasting sweet treats to charging bills on your credit cards. If you’re used to this decadent lifestyle, follow these tips to flip your spending on its head. They’ll help you break free from this costly habit and get your finances on track for the new year.