With the holidays right around the corner, you may be focused on what potluck dish you are bringing to the next Christmas party, who you need to buy presents for, and how to keep your travel plans running smoothly. We get it, there’s a lot on your plate this time of year.
While staying on budget for the holidays should definitely be high on your priority list, it shouldn’t be your only priority. In fact, now is the perfect time to take a step back and think about how you want your bank account to look after the hustle and bustle of the holiday season is behind you. Here are our top 5 tips to get your finances in shape as you head into the new year.
1. Look at last year’s Christmas budget
If your holiday budget isn’t set in stone, take a look at your spending during previous years. Also, look at your credit card statements and bank accounts to see where you may have gone astray. Do you always forget to budget in enough for holiday meals? Do you go overboard on stockings and stuffers at the last minute? Do you need a little more wiggle room than you normally give yourself? Try to pinpoint where you may need to spend a bit more this year before you blow through your budget. Asking yourself key questions and researching your past spending habits can keep you on track while you’re in the midst of seasonal celebrations. More importantly, fixing these problem areas before you overspend can help you start the new year off on the right foot.
2. Factor in saving up for fun stuff
We all want to save more, invest responsibly, knock out debt, and cut back on unnecessary expenses. However, when you approach financial resolutions with a mindset that you can’t spend or save up for anything fun, you may lose the inspiration to save at all.
To avoid this, try shifting your focus to the fun stuff. For example, think about where you want to travel or consider a big ticket item that you really want to buy. From here, you can start setting up savings goals to move you closer to your target. You’ll still need to think about your 401(k) and emergency fund, but if you get psyched up for your bucket list purchases first, you’ll get in better financial shape overall.
3. Think about your long-term financial goals
Instead of getting overwhelmed by long-term goals and crunching numbers, try to put aside the financial worry and dream about what you want your life to look like. What sort of future do you envision for yourself and your family? Maybe you want to buy a house with a big backyard so you can finally have a dog. Maybe you’d like to retire early and devote your life to humanitarian work.
Once you have your big picture in mind, you can start working backwards to figure out how much that dream will cost and how you can achieve it. Remember: it’s fine if your dreams shift and change over time. Gaining financial security along the way will benefit you no matter what.
4. Set up your automatic savings now
Once you have financial goals in sight, protect them by setting up automatic savings. With a Chime bank account, for example, every purchase you make on your debit card will be rounded up. Chime’s round-up savings account is an easy way to save money every time you spend money. You can also sign up for Chime’s “Save when I get paid” feature, which automatically puts a portion of your paycheck into savings as soon as you receive it. This ensures that you’re paying your future self first.
Valuing your goals is a surefire way to guarantee success. If you leave your savings goals until the end of the month, chances are high that you will run out of money or an “emergency” will crop up that derails your opportunity to save. By designating your savings to a separate account, it automatically becomes more sacred and untouchable.
5. Create new healthy habits
When it comes to making financially responsible decisions, it can be an uphill battle. If you’re stuck in bad money habits, like overspending or not budgeting, forming new habits can be hard. But, you still should aim for new healthy financial habits.
Maybe this means leaving your credit card at home and only shopping with your debit card or cash. Maybe you need an accountability partner to motivate you to stick to the path you’ve chosen. Or, perhaps you need to treat yourself when you complete certain milestones. Different methods work for different people. The most important thing is that you develop habits that will help you get ahead.
There’s no time like the present
It may seem like overkill to add something else onto your to-do list when you’re in the midst of making holiday lists, but budgeting for the new year now can save you heartache later. By getting a jump on your priorities and ending the year on a strong note, you’ll enter 2018 focused and ready to tackle your finances head-on.