How to Keep Post Holiday Spending in Line

Now that the holidays have concluded, and the feelings of joy and the season of giving is in the rear-view mirror, you can turn your attention back to spending in a way that is more reserved, prudent and downright smarter.

Spending too much over the holidays almost is a rite of passage in some ways. While most have a holiday budget carved out, the majority of individuals end up spending far more than they would have liked, mostly due to getting caught up in the marketing, sale prices, and overall glitz and glamour of just how enticing and tantalizing sales are during the months of November and December.

Generally speaking, financial experts tell you that you should shoot for a ratio that is in tune with what you make as a household income per year. A family that earns $50,000 per year should be around $800 for the holiday spending on average, and of course that number can fluctuate based on total income in the entire household.^[1]

What is neither funny nor ironic is that, in 2016, about 56 percent of the population said they had planned to rack up debt over the holiday season, suggesting that this year might be somewhere along the same line. Of that 56 percent, 16 percent of that debt wouldn't be paid off within a six-month time period.^[2]

Part of what makes this a disturbing trend is not only depleting what money you have bene able to save, but also going with the "any means necessary" mantra as far as credit card debt, and worse yet, dipping into your retirement.

While this is the season for giving and being generous, you certainly don't want to sacrifice your financial future as a result of being able to give gifts or overspend in general. If 2017 brought more of the same around your household, you have plenty of clean-up work to do as 2018 arrives, and that goes far beyond tossing away leftovers and cleaning up wrapping paper and cardboard boxes under the Christmas tree.

This has more to do with a paramount piece of how to be smart after the holidays: keeping post-holiday spending in check with simple adjustments to how you spend (and save) in order to avoid going even deeper in to the hole than you already have this holiday season.

Cashing Out: Use cash for 90 days after the holidays

Where you most likely tended to get yourself in trouble with your holiday overspending is the simplicity of ordering online or buying in store by simply swiping a piece of plastic and discovering later that day (with a debit card) or in 30 days (credit) that you really did some serious financial damage.

That convenience is hard to ignore and thusly live without, but if you're interested in spending less, a simple rule of thumb from January through March is to use cash for your purchases and put your credit cards in "time out" for that same time period.

Granted, you shouldn't use credit cards at all unless it's an emergency, but this is more about that acute, immediate fix after the holiday spending took you off your financial game.

Studies have long since suggested and ultimately proven that if you spend cash as your first choice, you have less credit card debt and spend less money. You'll have about $104 less in revolving debt and balances 2 percent lower than the average.^[3]

Think of the cash versus credit debate from the standpoint of large-ticket items, aside from cars and homes (let's assume you don't spend cash on these things).

How easy is it to see a TV, flat-screen, 55 inches and all the bells and whistles and simply hand over a store credit card when they offer six months no interest or any sort of "deal" as a result of a sale or promotion going on? If you trained yourself to think of a cash-first mentality, two things would come to your mind: 1. you don't have enough money on you at the moment to buy the TV, and 2. if you were using your "own" money, would you still want to spend the money?

You can see just how much cash makes you rethink these types of buys.

Call it a mental thing, but cash is very painful to let go of when it's between your fingers in comparison to the alternative: no emotion with one simple swipe.

Bottom line is card users spend about 15 percent more than those who carry cash.^[4]

Waiting Game: Before you buy anything, give it two days

The old adage "it's worth the wait" might be one that you'd want to adopt after the holidays sucked the life out of your spending.

Part of what makes spending (or overspending) so tricky is that it is rooted in enjoyment. Even as you were buying holiday gifts, chances are you pictured just how well this gift giving would go, the smiles on the faces of the people you are buying for, and leaving the holidays with your head held high, and bank account at an all-time low.

Spending also is such an impulse action. Studies have shown that impulse spending is related to unhappiness or anxiety.^[5]

The ability to spend and having it linked to enjoyment is what causes a lot of ails as far as overspending goes, so it's important to have a firm grasp on not only your financial standing but that part of spending, too.

You can eliminate post-holiday spending with a simple act: walking away.

Saving money and spending less starts with using the 48 hour rule (also referred to as the 24 hour rule or wait and see rule). No matter what parameters you use to describe the rule, the end result is the same. Before you act on a impulse, give it some time to marinate in your financial world and ultimately determine if the buy makes sense. Chances are, you'll spend less and decide you really don't want whatever the product or item is after you've had to time to really think it through.

The consequences of not waiting and contemplating can have more than just an adverse affect on your finances. About 75 percent of people say they've not only made an impulse buy but one that is hardly a cheap one. The numbers state that 16 percent of those individuals spent about $500 on that impulse, while 10 percent were in the neighborhood of $1,000. Again, it goes back to how that buying makes you feel; nearly half of those surveyed said the were excited when they were buying and didn't feel the least bit upset about it.^[6]

Revisit an Old Friend: Check your budget, twice if need be

How many Americans do you believe actually use a budget?

Go ahead, take a guess.

The answer: less than half.

About 41 percent of the population use a budget, a staggering low number when you consider just how important it is take expenses in relationship to spending.^[7]

If you take that into consideration and coupled with the holidays, that figure is likely going to drop. The tendency around the holidays is that the budget, as far as day to day, month to month expenses, isn't followed as closely, particularly when you think about holiday related conveniences, such as dining out to eat, that come into play when you're busy shopping, for example.

You'd be wise, post-holiday, to check your budget for thing you can potentially cut out of it to start saving again, such as cable television packages or phone bills. The key to any budget is knowing what you spend your money on, and that is even more important after the holidays.

This includes writing things down, having a spreadsheet that tracks expenses and income, rather than just going from memory alone.

Those who practice budgeting in the sense that they simply try to recall their expenses, numerically, only manage to stick to a budget 20 percent of the time, a paltry number as far as being able to monitor spending in a realistic way.^[8]

The plus is that 41 percent of the people using a budget is better than it was a few years ago, and that number keeps rising. That's especially crucial after the holidays, in order to get back on track, but don't forget that budgeting after the holidays also needs to include making hard decisions on how to cut, not just curb, you spending.

Pay Day: Start paying yourself to stop from spending

Some view overspending as a product of having too much free time on your hand, the joy of shopping in general and not prioritizing keeping track of your money.

Another facet of overspending is simply having money in the form of a paycheck at your fingertips. Simply put, you can't spend what you don't have, so thoughts immediately turn to an old financial stop gap to help you not only save but spend less: pay yourself first.

Generally speaking, you should try to save about 10 percent of each paycheck and put in toward your savings account. The money going toward a savings account or emergency fund is fantastic, but also it is money that you need to chalk up as being unusable, thus taking the urge out of spending what you have, but actually don't.

The question then immediately shifts toward how much you should be "paying yourself." That typically settles in nicely to a long-standing approach that has been utilized with great success.

Using the 50-30-20 line of thinking as far as paying yourself first has always done well, and is very simple to incorporate into any savings plan.

Again, keep in mind, that the more you assume money is being paid to you directly, the less your'll spend.

The 50 percent is for all thing you'd consider "needs" that you simply can't function without (realistically, of course), while the 30 goes toward spending money on things you don't actually need, more to be used for having fun or frivolous spending. The 20 is the percent you are going to want to put in a savings account, i.e. pay yourself first.^[9]

The great part about this "out of sight, out of mind" approach to paying yourself first is that all of this can be automated, so when you get your paycheck the money is already paid out to you, as if it never even existed in the first place.

This isn't about guilt or feeling as though the holidays shouldn't be revered and reveled in as a joyous time of year. If you overspent, and enjoyed the looks on the faces of your friends and loved ones, then you shouldn't feel bad about that.

But that doesn't mean you can't construct a worthwhile and effective plan to get yourself back on track.

This isn't a message of wholesale changes (unless your financial were as messy as that wrapping paper left laying) but rather really implementing ways to spend smarter and ultimately look back on the 2017 holiday season as one that brought smiles to the faces of more than just the recipients but also to you in the form getting over the holiday spending hurdle to help maintain the financial freedom and flexibility you'll want, even after you've perhaps went overboard.

There's nothing written or been said that suggests you can't absorb what you spent over the holidays and come out of the financial rubble in one piece.

Keep reading with: Why These After Christmas Sale Items Can't be Ignored