Despite our best intentions, many of us overspend over Christmas. It gets to the point where you make a decision – whether conscious or unconscious – just to spend money and sort it out “later”.
But now it is later, and it’s time to get your finances back on track.
It can be difficult to know where to start, so in this article we suggest five tips that may help. Even if you don’t do all five of them, doing anything – even just one of the tips below – is better than doing nothing at all and letting things slide further financially.
So take a read through our tips and see which you think might work for you.
Facing up to debt is never easy, but things will be worse if you just try to ignore it. So the first thing to do is get an overall picture of how much debt you actually owe, then you can decide how you are going to tackle it.
After Christmas the most likely culprit will be credit card debt, so make a list of the credit cards you have and how much balance there is on each of them. It’s also important to know how much interest you’re paying on each credit card balance. For example, you may have one card that has a special promotional low interest rate but another that is charging you a huge amount of interest.
The key thing is to reduce any balances with high rates of interest as soon as possible. Otherwise the interest that is added to your credit balance can cause your overall debt to increase very quickly.
If you have any savings you may want to consider using some of these to pay off your credit card debt. This can be a painful process, but if you are being charged a higher rate of interest on a credit card balance than you are earning on a savings account, it could make sense to use the money to get rid of your credit card debt and then start saving again.
Otherwise you need to do all you can to pay off those high cost balances, whilst making sure you pay at least the minimum balance on all remaining cards. We’ll look at some ideas for how to do this later in this article.
Many people zone out as soon as the word “budget” is mentioned, but it really is the only way to get – and stay – on top of your finances. Unless you know exactly how much money is coming in, and where it is all going, it will be impossible to manage your finances with any sense of confidence.
So start by making a list of all your income and expenditure. Make sure to include every single thing, no matter how insignificant.
Once you have a list of both income and expenditure, it will be easier to see where your money is going and to understand if there are problems such as not having enough income to cover your expenditure.
It’s also important to review your budget regularly and track your variable expenditure. For the first month, take time to record every single thing you spend and then compare it with your budget. You may well find that there are several differences. For example you may be underestimating one or more areas of expenditure, and spending a lot more than you thought you were. But once you are aware of this you can make a decision on how to handle it, perhaps increasing your budgeted amount for some categories and cutting back in others.
For many people, making a budget and tracking expenditure leads to a realisation that income and expenditure are not balancing very well, and most months are likely to end in a financial deficit. And, particularly if you are also trying to pay off debts such as Christmas, you need to take action to change this.
Our next two tips will help you to do just that . . .
One obvious way to help balance your budget is to find ways to increase your income. A good place to start is with your day job. Is it possible either to move to a better paid job in the same company or to increase your hours? If not, perhaps it’s time to try and find similar work that pays more than you are currently getting.
Another option is to take on a second job. This could be a few evening or weekend shifts in a local business such as retail or hospitality. Or you may want to start trying to make extra income by offering services as a sideline, for example babysitting, pet sitting, DIY, gardening, admin or IT support.
If you just have a short term issue with your budget – perhaps while you pay off your Christmas debts – another solution would be to see if there are good quality items in your home that you no longer need and could sell. For example household goods, technical gadgets, musical instruments, cameras, or vintage jewellery.
Any of the above could boost your budget either on a short term or permanent basis, and help to get your finances back on track.
Along with increasing your income, it’s also important to find ways to reduce your spending. This is often possible even if it feels like it isn’t. Five ideas to try are:
The initial main purpose of the above tips is to get your finances back on track after Christmas. But if you continue to embed some or all of them into your regular lifestyle, you should soon begin to not only get back on track but also to enjoy healthier finances overall. And at this point you should hopefully be able to start building some savings.
Having savings to fall back on is a huge advantage as it enables you to cope with life’s twists and turns. And also means that you have money set aside to enjoy some of the nicer things in life. Not to mention having some money ready for next Christmas!
So once your post-Christmas debts are under control, start paying what you can when you can into a savings account, and bit by bit your future finances should become that little bit more secure.
We hope that this article provides useful tips on how to get your finances back on track after Christmas. And remember that if you are looking for personal loans online to help get things sorted, Munzee may be able to help.
And do visit us here again soon for more financial and lifestyle tips from Munzee Loans.
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