Following a season marked by celebrations and spending sprees, it's time to crunch the numbers. Here are five tips on how to successfully get through the dreaded post-holiday budget crunch.

The start of a new year is usually a time for resolutions. Aside from the more common ones - to maintain a healthier lifestyle or to read more books - there are also financial resolutions. A few common examples are to save more, to manage your money better or make wiser investments.  However, due to a variety of factors that come up in after the holiday season, it can be difficult to meet your financial objectives in the short-term because of the post-holiday budget crunch. 

The expression "tighten your belt" is often used to make changes in order to save money. In January it is related with the post-holiday budget crunch. The phrase comes from the fact that when you don't have enough to eat, or you want to live more frugal, you have to tighten your belt. The reasons behind the post-holiday budget crunch: first, due to increased prices in certain public services with regulated fares, such as public transportation. In these cases, cost adjustments are made in line with the CPI (Consumer Price Index).

Second, due to the money spent in households – which is often excessive – during the Christmas and New Year Holidays. During this time, many people find themselves spending more money than usual. This means they save less and some people end up in more debt, which is generally reflected in the expenses they face in January.


How to manage the belt-tightening period 

Proper financial planning can help prevent any economic difficulties after the Holidays. Here are some tips that you can put into practice: 

  • Take control of your spending. If you want to avoid the post-holiday budget crunch or are looking for some measures on how to combat it, the first step is to identify your current expenses and which ones are non-essential. This way, you will save on products or services that you don't need, like subscriptions to content platforms you don't use or a gym membership for a gym never go to. You can also cut back on meals out or set spending limits for leisure activities. 

  • Try not to take on any more debt. You may have to tighten your belt before the Holidays, in December, without realising it.  As the  holiday season approaches, you may be tempted to abuse your credit cards or personal loans to buy gifts. If you have to face these financial obligations, it is best to calculate what you owe and what you can realistically afford to pay back, based on your income, as well as the deadline for repaying the debt. Taking on additional debt during this period is not advisable. It could make it more difficult to repay what you owe, or lead to a situation of being overextended financially.

  • Plan your finances. Once you are aware of your expenses and debts, it is an ideal time to start planning your personal finances. Having a budget will assist you in meeting your current financial obligations in an organised manner- It will also help to make more informed decisions about your money. Having a bank account can encourage you to save and making it a habit will help you be better prepared for special events. It is better to plan expenses ahead rather than being financially overextended. Openbank offers a guide to help you understand how to create an effective financial plan for the rest of the year.

  • Try to earn extra money. When you find yourself struggling to make ends meet early in the year, it could be a sign that you're spending more than you earn. One way to improve your financial situation is to look for additional sources of revenue. You can sell the items that you don't use - such as clothes, accessories and electronic devices- or you can rent out a spare bedroom. These methods are becoming more popular and are available through specialised apps and websites.

  • Consume responsibly. Making small changes to your daily routine can have a big impact. Something as simple as making a shopping list can help you avoid buying unnecessary items, comparing prices before you make a purchase can save you money in the long run. Temporarily deleting your bank card details from e-commerce apps can also help you avoid impulse purchases. Saving money also helps protect the planet. Turning off electronic devices and lights when you are not using them and taking advantage of second-hand markets or the collaborative economy are just some methods that can help both your purse strings and the planet. 

In addition to following these tips, any other measures you take to manage your personal finances will have a positive effect. Keep in mind that every small action will make a difference when it comes to reducing the effects of the post-holiday budget crunch.

You might like