25 Jan Money, Money, Money

By Brenda McCafferty, Senior Financial Literacy Trainer, ECMC

How sweet these words sound in your ear…well, except for in January.  The sound is more like, bills, bills bills.  How painful can it be?  It seems no matter how hard you try not to over spend during the holidays, you usually do.  Then there is the painful sound of January when taxes are ringing in the New Year.  Property tax, income tax, pet tax and don’t forget the annual home owners or auto insurance.  What were you thinking when you purchased a home in late December or early January?  As you know, timing can be everything.

Seize today!  January is the perfect time to plot your December attack to avoid the future stress of the upcoming holiday season.  Spend a little time as you begin to organize for the new year to recall little mistakes you made during the last couple of months.  Now, pull out your smart phone or other device, add some key action items, and include monthly checkup dates to make sure you are remembering little tidbits throughout the year.

Make your holiday shopping list.  The best time to shop is just after the holidays.  The first six weeks of the new year will be full of sales, and clearance offers, don’t forget the huge President’s Day sales in mid-February.  By making purchases well in advance, you will find you get a much better deal and you tend to find more meaningful gifts.  As you shop, only consider the purchase if it calls the name of someone special on your list.  Check!  One item now off your holiday shopping list.

Visit your personal bank or credit union and open a holiday shopping fund.  If you have auto withdrawals from your checking account on the same day your paycheck hits your account, it’s as if you never miss the money.  Some employers even allow you to have part of your payroll check deposited into a special savings fund.  Start the fund with the amount you can commit to for each pay period of the year.  If that’s $100 a month, awesome, you will have $1,200 by December to get you through the holidays.  However, if its only $10 a week, you will still have $520 as an added bonus at the end of the year.  This savings can easily get you through all the unexpected parties or events plus fun stocking stuffers.

Create a new budget.  There is no better time than January to review all your financial commitments.  As you prepare for your income tax preparation, categorize all your receipts, bills, and assets by grouping each item into one of six major categories: housing, food, utilities, transportation, debt and miscellaneous.  As you develop your budget over the next few months, miscellaneous will also be grouped into a few more categories.  You have a year in review at your fingertips so set realistic goals.  What did you spend on housing and utilities?  Can you afford the home you are living in?  If not, especially if you are renting, it’s time to go shopping.  Always consider utilities when shopping for new living space.  Just because you can get more space for your money, after reviewing utilities you may be spending more.

Review and review again.  Each month, set aside a few minutes to take a look at your real numbers.  Never assume you are on target.  You’ve got to know your numbers!  Tweak accordingly.  Some people find the snowball plan—paying off the smallest bill first—a good way to begin to pay down debt, increase savings and find financial happiness.  Keep it simple.  Many people chose not to have a budget because they find it stressful and overwhelming when pennies don’t seem to stretch far enough; however, without a budget, spending tends to continue to spiral out of control.

When’s the best time to prepare for the holidays?  Today!  Now, let’s get busy!