It can kind of be easy to underestimate how much you’ll spend over the holidays. But when that time of year does roll around, you find yourself spending on ingredients for new recipes, cute decor pieces, outfits, fun trips, and even ways to make your home feel more cozy. And this is all before the presents.
But once the holiday shopping is done and you’re settling into January, figuring out how to get back on track financially and get rid of the debt that was created can be extremely overwhelming.
So here are some simple money moves you can apply to your situation to track your finances effectively. And while it won’t happen overnight, taking a step in the right direction can definitely help your financial recovery and get you ahead. So check out these steps you can take in the New Year
1. Do a Holiday Spending Audit
Analyze and do an audit of all your holiday spending.
Look at everything that’s been spent, how much you owe, what you can do differently next year, and how quickly you can pay off your debts according to your monthly income.
And while looking over and analyzing your post-holiday financial recovery plan, make sure to list all debts from smallest to greatest so you can apply the snowball method. It’s a great way to build momentum and gain traction on your goals to become debt-free a lot faster.
2. Review Your Cash Flow
After figuring out where all your holiday money went, it’s now time to figure out your cash flow.
So write down how much money you bring in each month, other potential sources of income you can take advantage of, tax refunds, and bonuses. Doing this is a great way to take control of how quickly you pay off your debt and change up your financial priorities.
This is also a great time to figure out your financial path for the new year and decide where you want to focus your energy the most.
3. Create a Budget and Spending Plan
If you’re spending more than what you’re earning, then paying off this holiday debt is going to take a whole lot longer.
So create a very simple budget that you can actually stick to. Look over what you’re regularly spending money on, what can be cut out, and how you can cut down on your regular expenses and bills.
This step will help you to adopt better spending and saving habits and keep your savings goals at the front of your mind.
And if you need a bit of help getting started, then here’s my 7-step guide on creating a budget that helps you with consistent saving.
4. Increase Your Income
Earlier I mentioned finding income sources you could take advantage of. And this could be doing something as simple as Uber or even teaching online courses on an extremely useful skill that you have.
I know that it’s easy to think that you don’t have the time to start your own side hustle or take on a second job. But if you do want to become financially free this year, then making time for this is essential.
So look at where you might be spending too much time on things that don’t really matter like doomscrolling or Netflix. Then figure out how much you want to cut back on these things so you can start making more money on the side, and redirect that toward paying off your debt. Any extra income can help you get finances back on track and move you toward your long-term financial goals.
5. Start Monthly Money Meetings
It’s easy to say that you’ll limit your spending and save more, but it’s even better to do monthly money meetings with yourself or your spouse to make sure you’re holding to these goals.
So make it a habit to look over your spending and earnings, and especially during the time you’re doing a new-year money makeover. Doing this will help you easily track where the money went and what you need to tweak and adjust in your budget and lifestyle.
6. Start Using the 2-Week Rule
Here’s a good way to trick yourself into saving money when you’re tempted to buy something you don’t actually need.
Leave the item at the store for a couple of weeks. It’ll still be there, and you’ll have time to think about if you really want it. Many times I’ll wait two weeks and by the end of it, I don’t even want whatever that thing was.
The excitement and newness around the accessory, gadget, or outfit has worn off (kind of like if I had already bought it!) This mindset shift really does help change and strengthen your spending and saving habits naturally.
7. Start Planning for Next Year
It’s never too early to plan for the next holiday season, and doing this can save you so much money!
So make a list of your friends and family you want to give presents to and write down what they want. Then in the mean time, you can find bargains and deals before things get expensive during Christmastime.
And while you’re doing that, open up a separate saving account for the holidays! Many banks already offer this, and throughout the year, you can consistently set money aside for next year’s holiday expenses without even thinking about it.
Grace Moser is the author and founder of Chasing Foxes, where she writes articles to help women create a life they love in big and small ways. She's been a full-time traveler since 2016 and loves sharing her experiences and exploring the world with her husband, Silas. Her lifestyle and travel advice can also be seen on sites such as Business Insider, Glamour, Newsweek, Huffpost, & Apartment Therapy.