The January Hangover
It’s that time of the year. The weather is cold, the holiday high is over, and the statements start rolling in from the holiday season.
The holidays bring in so many ways to indulge in excess that January is often a good time to spend some time in self-review. Whether you are thinking about your finances or your health, there’s a good chance that you’re beginning this year with a renewed sense of commitment to your goals.
There may not be a lot that you can do now about spending more on the holidays than you had anticipated. Just like when your clothes are feeling a bit snug, your pocketbook may also be bursting at the seams. The only way you can assess the situation and make an intentional change is to stare down your finances and review what is still working for you and agree to some changes in the areas that need improvement.
What did your last 3 months look like?
What will the consequences of those choices look like this year?
How did your actions feel at the time? How long did those feelings—good or bad—last?
Now that you’ve seen your statements and your actual debts owed, what would you say to yourself if you were being honest with yourself?
Stand by your word
If you have a bag of clothes, toys, or tchotchkes that you intended to return, now’s the time. Most stores will honor returns within 30 days or offer you a store credit. Returning does not mean buying more. We repeat—do not buy more just because you walked in the store. Just get the unnecessary items out of the house and back at the store.
How do I make a plan that works for me?
Initially, maybe you’ve decided to drop that once-a-day latte habit or kick the Wednesday fast food dinner run in favor of healthier, quick grocery store options. Perhaps selling that timeshare or getting rid of the boat that constantly needs repair is how you want to start trimming your budget. Maybe you have your parents, adult kids or grandchildren living with you and it’s time for them to start paying for some of the utilities and some rent.
There are two general theories for budgeting:
Continuous Tracking recommends recording every expenditure you make over a sustained period of time. It allows you to see the success of your goals being realized month after month, even as birthdays, holidays, and unexpected emergencies rise up to rear their ugly heads.
Tracking over time also allows an honest review of how much money is actually being spent on consumables and other sundries, such as fast food, restaurant meals, on-the-go beverages or drinks after work and on the weekends with friends. Read here to see a success story of a family who uses Continuous Tracking.
However, Continuous Tracking is often prey to the insidious Budget Burnout that has notoriously destroyed your budget, your neighbor’s budget, and everyone else’s you know. Continuous Tracking also requires personal honesty and according to Sherman Hanna, a professor at Ohio State University who studies financial habits, people tend to fib about their spending on their personal budgets. 
Short Term Tracking is popular because it is difficult to make a sustained commitment to the time it takes to track every expenditure month after month. It can also be used as a way to shock people into action about the reality of their spending habits. It’s popular with financial planners who are looking for a general representation of a person or family’s expenditures so they can estimate income needs in the future.
So, which method feels right for you? Perhaps you’ve chosen to take the austere route and focus on compiling physical receipts, tracking them in a spreadsheet and then adjust your monthly spending accordingly. Maybe you just need that jolt of awareness for a few months. No matter how much time you think you’ll spend on reviewing your finances, the system you create has to work for you over the long haul.
Set goals and boundaries
It’s important to know what your goals are. Often, the best way to set goals is to know what you absolutely will not tolerate. For instance, that monthly night out with friends is a “Must Keep” and while those season tickets are an indulgence, it’s the one thing you really enjoy doing with your Dad each year. Those are clearly items you value so those are the things you’re committing to—no matter what.
Maybe your doctor said your blood pressure is up quite a bit and you know that movie popcorn is probably contributing to that. Cutting out the popcorn—and maybe even the movie theater habit—would be good for your health and your budget.
So, what method of budgeting will you employ? Intrinsically, you already know the method that will wok best for you. After you have set some strict boundaries that you know you can commit to, it helps to come up with some tricks you can rely on so when the going gets tough, the tough stick to the budget.