If the holiday season left you depleted of energy — and dollars — the new year is a great time to reboot your life and get your financial house in order. For many of us, the desire to save money and reduce debt will be near the top of our lists of New Year’s resolutions.
If you’re among those resolution-makers, it might be easier to achieve your goal if you refrain from spending altogether — or spending the bare minimum — as January unfolds. A month-long financial fast could give you some breathing room to organize your finances, pay down holiday debt and get off the splurge-and-regret spending cycle. Here’s what you need to do.
[See: 10 Financial New Year’s Resolutions.]
1. Review your baseline spending. Begin by taking a close look at your monthly spending. Determine the cost of bare necessities, plus any monthly payments on debt. Make sure that you’re leaving room for an increase in minimum payments if you made big credit card purchases over the holidays.
2. Delay new purchases. As you come down from the holiday spending buzz, make a conscious effort to delay any more purchases, even if it’s during an after-Christmas sale or the last markdown of the season. You need to create some space between your last round of spending and your spending in the new year. If you find something you like or “must have,” put it on a wish list to purchase later. Chances are that the item isn’t really a necessity, and the delay just might make you reconsider buying it at all.
[See: 12 Habits to Help You Take Control of Your Credit.]
3. Start tracking every dollar. Becoming more conscientious about your spending habits can make it easier to sustain a financial fast for more than a couple of weeks. If you tend to spend on impulse or never seem to know how much you’re spending and where, start tracking every dollar spent, so you can see exactly where your shopping habits are taking you. Keep a “spending book” to jot down every purchase, or use one of the scores of smartphone spending apps available. Review your outlay at the end of the day and analyze where your money is going. You may be surprised. The simple habit of logging your daily spending might be enough to help you cut back and stick to your fast, especially when you start to miss the luxuries.
4. Feel the pinch. One way to tell that your fast is working is that you’re “feeling the pinch.” You’ve cut out the extras and the luxuries and have resisted the urge to splurge, and you feel it. You miss spending whenever you felt the urge. That’s good. Your goal is to spend the absolute bare minimum to keep your life running — food, housing, health care, utilities. Happy hour, the movies, fancy cheese when cheddar will do should be missing from your life during your fast. It’s okay to miss those luxuries. When you’ve reached your goal, you can have them back. Even better, if the fast really suits you, maybe you won’t want them back after all.
[See: 10 Foolproof Ways to Reach Your Money Goals.]
5. Break the recreational spending habit. Going on a financial fast can help you realize how often you turn to shopping or spending to pass time or deal with boredom. If you are more of a recreational spender and have a hard time keeping your budget under control, the fast can help break the habit. It will feel like going cold turkey for a while, which is why you need to fill your time with other activities — anything that doesn’t cost money. Maybe you can finally read the books gathering in your “read later” pile. Maybe you can seriously declutter (and earn some extra income selling your clutter on eBay or Craigslist). Whatever it is, the goal is to make a shift to a no-cost activity, so you don’t pass time shopping or spending.
6. Set some inspiring goals. Some self-motivation may be in order if you want to keep on a better financial track in 2017. Create a list of purchasing priorities and big-ticket items that you want to purchase within the next year. Be specific and set dollar amounts next to each item, so you have a clear idea of how much you need to save or earn to turn that dream into a reality. Make sure that what you choose, whether it’s a vacation, new car or paying off all your debt, is big enough and motivating enough to keep you excited about working toward it. If you don’t care much about your goal or vision, you won’t be eager to stick to your financial fast for more than a few days.
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How to Start Off the New Year With a Financial Fast originally appeared on usnews.com
