Another holiday season has come and gone. The decorations are put away, the kids are back in school and we have returned to everyday life. But for 35% of us, the holiday debt is looming.
According to reports, 2022 had the highest average holiday debt – over $1,500.00 – since LendingTree began tracking back in 2015. With interest rates and inflation at an all-time high, now is the time for consumers to break the bad habits and adopt good ones that can lead them to financial success.
Here are five ways to start fresh financially in 2023.
Break habit
Overspending and impulse-shopping can continue to weigh you down, financially. By identifying the triggers that started the overspending to begin with and then putting a plan in place to overcome those triggers next time they arise, you will help avoid continued overspending.
Assess, revisit
Assess the extra debt you accumulated during the holidays. Many retailers extend their return policies during this season. Is there anything that you really don’t need that you can return or any upgraded items you purchased that could wait a little longer? This can be a great way to help drop some of that debt immediately.
Tackle debt
Now that you have your additional debt down to a number it’s time to revisit the budget, adding that number in. A budget should include all income sources, as well as your monthly expenses, debt repayment and savings. Now is also the time to reassess your wants versus needs. It may be the time to sacrifice those morning Starbucks runs or learn how to do your own nails and then redirect those saved funds toward debt repayment.
Set financial goals
Once your budget is updated and your debt repayment plan is in place, set savings goals so that you don’t end this year with the same problem of overspending. Budget for and have a few bucks automatically transferred directly to a savings account to start building that savings early for next year. Any time you pay off a debt, increase that transfer to give you an even bigger buffer. Even starting small can add up to valuable savings by next holiday season. Check with your financial institution to see if they have a special holiday savings account – some even earn a bit more in interest.
Stay diligent
A budget can and should change over time. Any time any of your expenses or income changes, so should your budget. Revisit it often to make sure that you’re staying on track. Keeping it an active task in your routine will make sure that you don’t lose sight of it.
Overspending during the holidays is something that a lot of us have experienced, but with a change in your mindset and a plan to make healthier financial choices through budgeting and revision, you can adopt better habits and lead into the next holiday season with financial confidence.
Rachel Caballero is the community development manager at TruWest Credit Union. Headquartered in Tempe, TruWest Credit Union operates as a cooperative providing its members with a lifetime of quality financial services and a culture of caring for its organization, employees and communities. For more information, visit truwest.org.
