Financial Wellbeing

How to Recover Financially After the Holidays

The holiday season often brings joy, connection, and cherished moments—but it can also leave a dent in your finances. If you overspent on gifts, travel, and celebrations, you might be starting the new year with a financial hangover. Now is the time to regain control, reset your habits, and build a healthier financial future.

Here’s how to get back on track and create better money habits for the year ahead. 

The Challenge

30 Days to Better Money Habits

To kickstart your financial reset, try this 30-day challenge.

Week 1: No-Spend Challenge

• Avoid unnecessary spending for an entire week—only buy essentials like groceries, bills, and transportation.
• Find free alternatives for entertainment (e.g., movie nights at home, free community events).
• Reflect on your spending habits and identify areas where you can cut back long-term.

Week 2: Review and Negotiate Bills

• Go through all your regular expenses—phone plans, internet, insurance, and subscriptions.
• Call service providers and ask about promotions or ways to lower your bill.
• Consider switching providers or bundling services to save money.

Week 3: Sell Unused Items

• Declutter your home and find items you no longer need (clothes, electronics, furniture).
• List them on platforms like Facebook Marketplace, eBay, or Poshmark.
• Use the money earned to pay off debt or boost your savings.

Week 4: Automate Savings and Payments

• Set up automatic transfers to your savings account
• Automate bill payments to avoid late fees and improve credit health.
• Start a sinking fund for future expenses like upcoming holidays 

Assess the Damage

Before making any changes, take a clear-eyed look at your financial situation.

• Review your bank and credit card statements: Identify how much you spent during the holidays, where your money went, and why.
• Check outstanding balances: If you used credit cards, note the total balance and interest rates.
• List your upcoming bills and expenses: Make sure to account for essentials like rent, utilities, and subscriptions.
• By assessing the damage, you’ll get a realistic picture of where you stand financially and can start making an action plan.

Create a Budget for the New Year

A new year is the perfect time to reset your spending and savings goals.

• Track your income and expenses - understand how much money is coming in and where it’s going.
• Use a budgeting method: Consider using the 50/30/20 rule—50% of income for needs, 30% for wants, and 20% for savings and debt repayment.
• Set spending limits: Allocate specific amounts for groceries, entertainment, and discretionary spending.
• Use a budgeting tool: Apps like Mint, YNAB, or even a simple spreadsheet/budget planner can help you stay on track.
• Creating a structured budget helps ensure that your money is working for you rather than against you.

Cut Back on Unnecessary Spending

The first quarter of the year is an excellent time to be more intentional with your spending. Consider the following:

• Pause non-essential purchases. If it’s not a necessity, wait 30 days before buying it.
• Reduce takeout and dining out. Try meal planning and cooking at home to save money.
• Cancel or downgrade unused subscriptions: Review streaming services, gym memberships, and other recurring expenses.
• Find cheaper alternatives: Opt for free activities, use coupons, or shop sales for essentials.
• Even small cutbacks can add up, allowing you to free up cash for more important financial goals.

Set a Financial Goal

Having a financial goal gives you direction and motivation. To set a goal you can:

• Choose a specific goal: Do you want to pay off a credit card, save for a vacation, or build an emergency fund?
• Set a deadline: Define a clear timeframe (e.g., “Save $1,000 in 3 months”).
• Break it down: If your goal is to save $1,000 in 3 months, that’s about $84 per week.
• Track your progress: Use a savings tracker or app to monitor how you’re doing.
• Clear goals make it easier to stay focused and motivated throughout the year.