Did you overspend this past holiday season?
You’re not alone. 45% of Americans have felt pressured to overspend, or to spend more than they wanted to, during the holiday season. The pressure to spend comes at us in virtually every way imaginable. We’re shown an onslaught of ads everywhere from television to our social media feeds. We get lost in an endless cycle of discussing who purchased what gift for whom, and frankly, it gets overwhelming.
The good news is that if you did overspend this past holiday season, you get to change the tides this year. Let’s talk about how to recover from holiday over-spending, and how you can prevent it from happening in the future.
Figure Out What Went Wrong
Your first step is to figure out what, exactly, went wrong during the holiday season. Did you go into your holiday shopping without a budget? Did you feel pressured to splurge on your kids, or your significant other? If so – why?
Determining exactly where you overspent, and what the motivation was to do so, can help you to work out a strategy for avoiding over-spending during next holiday season. Often, you might be surprised by your answer.
Maybe you feel guilty for not spending as much time as you used to with your kids as a newly divorced mom, so you overspent on gifts. Maybe this is your first year with grandkids, and you wanted to go above and beyond to make it memorable with a fully-decorated house and a huge family meal. Or, maybe you just had seen the same ad time and again on Facebook until you finally clicked through and purchased your spouse or partner something they didn’t necessarily need.
Whatever your “why” is – don’t feel ashamed. Everyone falls down periodically, and overspending happens. Instead of beating yourself up, use this information to start picking yourself back up and starting over.
Go On a Money-Cleanse to Reset and Recharge
When you overspend, it can be helpful to cut back and hit the reset button. While I don’t typically recommend strict budgeting habits in an ongoing capacity, restricting yourself for a short period of time while you recharge your batteries and reorganize your priorities can be a huge help. Maybe take a month off of spending on non-essentials, or decide you want to avoid eating out for a few weeks while you adjust to eating, exercising, and generally living on your normal schedule.
One of the biggest dangers with overspending during the holiday season is that it can quickly become a habit. When we get accustomed to spending frivolously, it’s enjoyable. Eating extravagant meals, taking our spouse or partner on exciting date-nights, buying gifts and decor, and spending days or weeks away from work is all a lot more exciting than our regularly scheduled programming. Stripping your days of the “extras” for the time being can help you to do a kind of financial cleanse. It helps you to adjust back to “normal” living, and once you’re readjusted you can start to see your priorities with renewed clarity and stay on track to reach your money goals.
After you’ve “reset” your finances, you can start to think ahead for the new year. What goals do you have? What do you want to achieve that wasn’t necessarily possible when you went off-plan during the holidays?
This might be reprioritizing saving for retirement, debt repayment, growing your children’s college funds – you name it. Only you can determine your goals, and which of them are most important to you right now. As you create your goals and prioritize them, you can start to think through a strategy for your year.
For example, if you want to increase your retirement savings, maybe you work to automate extra contributions to your workplace 401(k). Or if you want to pay down your debt more quickly, you can research whether sticking to an “avalanche” or a “snowball” repayment strategy works best for you – and start implementing it.
The key when it comes to recovering from post-holiday over-spending is putting plans in place to prevent it from happening again. The best way you can do this is to stick with your prioritized financial goals, remember what pushed you away from those goals this past holiday season, and decide how you’ll navigate around those missteps in the future.
This might mean setting aside a certain amount of funds each month starting now so that you’re not caught off guard next holiday season. It might mean you have an honest conversation with family about how time together is more important than an extravagant party – and adjust expectations as a unit going into next season. Whatever decision you make, it can be helpful to have a fee-only, fiduciary financial planner in your corner to hold you accountable and help to keep you on track. Ready to get started? Contact me today to learn more!