Sticking to a budget can be challenging any time of year— but most especially during the holidays.
"Splurging is far too easy at the holidays," says Brad Scheidt, Executive Vice President (EVP) for Oklahoma Central Credit Union. "And while it can feel fun and festive in the moment, you'll be confronted with the cold reality of too much debt come January."
The good news is, you can control your spending with budgeting — and a few more helpful strategies.
What triggers you?
Let's begin with what sets off overspending. There's often a particular emotional state that triggers shopaholics. For those who tend to spend when they're stressed or depressed, buying something new gives them a pleasant rush of relief. Of course, that will quickly turn to more anxiety when the credit card bills roll in later or there's not enough money to pay the rent. It can be a vicious cycle.
Sometimes, it's situational. The holidays are a perfect example. It's far too easy to shop for yourself when you're out at the mall or a craft fair — and easier still to buy things you may not need while shopping online. A few clicks of the keys will bring you excited anticipation and joy, but unfortunately, that pleasure may be short-lived. "Self-gifting," as it's called, is a popular thing over the holidays, with nearly a fourth of people buying themselves presents during this time.
After the first of the year, however, buyer's remorse can set in when it's time to pay up.
Controlling spending the smart way
The first step to financial wellness is to establish a budget. No matter if you're buying groceries, planning a vacation or thinking about holiday gift giving, set yourself limits. Sit down and estimate how much money you'll need to spend for everything over the year: rent or a mortgage, utilities, insurance, clothing, gifts, etc. Compare that to how much you make and how much you want to save or invest. Keep track of that — there are many online tools that can help you with budgeting, or just write it all down in a notebook. The key is keeping up with it and remaining aware of your spending.
Budgeting doesn't have to be a miserable exercise in self-denial, however. Set aside a little money with each paycheck for the fun things you want to do with your money, and then stay within your set limits. If you like to have dinner out once in a while, attend an event or shop a special sale, factor that in. Some experts also recommend you put yourself in time-out when you see something you're itching to buy. Give it a few days and see if you still want it as much. And if so, figure out how you're going to pay for it before taking the plunge.
Some people even set up separate bank accounts for certain things they tend to overspend on, like food or holiday shopping. That's all they use these accounts for. It's far easier to budget and track expenses when the only time money comes out is for those specific things, even if you and a partner are both using the account. Decide how much you'll need, sock it away, and when it comes time to shop, you can do it without the anxiety of where the money will come from. You'll already have it.
Also, be careful to limit the use of credit cards. Some people go so far as to leave them at home when they're heading out to an environment where they know they may be tempted to go overboard, like a mall. It's a good idea to only use credit cards mindfully, when you've determined you must make a specific purchase now that you'll need to pay off over time. That might include a new appliance or an unexpected auto repair.
For everything else, consider using cash or a debit card. Not only will that prevent you from running up a big unplanned-for credit card bill you'll need to struggle to pay down, but you'll probably think twice before spending the money in the first place.
Finally, avoid putting yourself in a zone where you know you're likely to overspend. If you need to make an online purchase, buy what you need and then close your browser and do something else. If you're an emotional spender, think of other ways to make yourself feel better, whether it's a walk, a hot bath or a chat with a friend. Distract yourself!
You can do this
Nobody wants to head into the New Year saddled by bills they're not sure how they're going to pay. The good news is, it doesn't have to be that way. "Don't think of budgeting as an unpleasant thing," says Scheidt of Oklahoma Central Credit Union. "It's actually very empowering. When you manage your money well, you can truly enjoy buying gifts for your friends and family — or even self-gifting — while knowing you won't lose a wink of sleep worrying about how you're going to pay for it all."
Give yourself a present this year and make a budget to start the year with financial freedom from debt.