The holidays are over, and it is time to whip yourself back into shape. If you’re like most Americans, you likely blew your diet with tons of holiday goodies. However, your waistline may not be the only thing feeling a squeeze—77% of people blow their holiday budget. If you fall into that category, it’s time to trim more than just the turkey! Get your budget back on track so you can make the most out of 2018.
Did you know that January is the most depressing month of the year? You just went out and spent a bunch of money on things like bullets, fishing poles, hunting gear or whatever your fancy—basically everyone is out there spending money on stuff! Now that the wrapping paper is in the trash, you might be reflecting and thinking, “Holy Batman I just spent more money than I needed to on Christmas!”
Obviously, you didn’t follow my advice on how not to spend so much money on Christmas, AND instead, you bought Aunt Margaret that crockpot—four times—spending more money than you should have. So here we are. What do you do now?
The very first step to take is sit down and construct the budget. (Yeah I’m talking about budgets again). A budget really is just telling yourself where you are going to spend your money over the next little bit. Whether it’s for 30 days, 90 days, 100 days, or whatever—you just need to figure out how to spend the money.
A good way to get the budget back on track quickly is a budget fast. That means you’re not going to spend money on anything that is unnecessary. Necessary is the key word there. You’re not going to spend money on those fancy new nails—well bullets are necessary and so is Pizza, so we’re not talking about these—BUT you are not going to buy another crockpot, or that brand new couch your wife wants so bad she can’t stand it. The plan is to make intentional purchases because you’re bringing your budget back in line. In doing a budget fast, you’re going to build up cash reserves in your accounts. So trim the pork to get the train back on track quickly!
If you used credit cards for Christmas—SHAME ON YOU! Now that we have that out of the way—if that is you (and you haven’t listened to anything I’ve said in my career) then now is the time to get out of it. Debt is not good. Credit card debt is HORRIBLE!
(Note: This is not for those that pay their balances off each month and utilize credit cards for their good.) Here’s what you are going to do. Pay off the balances. We’re going to get ferocious about it! I mean, we’re calling it the red-headed stepchild, and we are going to kick it to the curb! Throw everything at them. Diligently devise a plan. Cut coupons. Sell everything—except the baby because that’s illegal—to get out of credit card debt. You can do this. It’s not impossible, but it is hard work.
Now, you’re going to start investing. If you don’t already have it in your budget, add it NOW! If you do already have it in your budget, then increase it! I’m not always the biggest Dave Ramsey fan, but I will say that he has this one thing right—he says after you get your emergency fund set up and your budget on track, allocate 15 to 20% of your income to your long-term savings. That is definitely something I can get on board with! One of the biggest mistakes I see people making is that they are NOT saving enough. They say I’m going to put back 10%. NO! STOP RIGHT THERE! You need to put back 15-20%!
If you have money going to your retirement account, great. However, maybe you need to consider a 529 Plan now as well. Congress just passed new laws concerning the 529 plans. Now you can utilize those funds for K-12 and not just at accredited institutions! So people, like myself, who may want to send their kids to a vocational school or a private school or an unaccredited private Christian college or wherever it is they want to go, can now. Make sure you are using a 529 plan because they grow TAX-FREE! It grows TAX-FREE people! You can’t get better than TAX-FREE!! So if you have children, use a 529 plan in your investment planning
Those are three ways to get your budget heading in the right direction for the new year. If you still need help slicing up your budget, contact me. We’re here to make your 2018 budget financially simple.