How to get back on track financially after the holidays

The holidays are a time of giving, generosity and sharing quality time with family and friends. While these acts can leave you with lasting memories, they can also take a toll on your wallet. After all, the average consumer pays nearly $900 during the holidays toward gifts, décor and food.

When the festivities are over, you may wonder how to get back on track financially. How do you refocus your goals, bump up your savings game and recover from the hefty holiday spending?

If your finances require some recovery, it's time to prepare for your new-year money makeover. Get ready with these simple but powerful money moves.

Identify your financial goals for the new year

Determining your financial priorities is the perfect way to refocus your efforts and gain traction on your goals. The new year marks a popular moment for taking action, but you can start working toward a financial goal anytime.

Remember to pin down both short-term and long-term objectives for your money. Short- and mid-term goals may run from a couple of months to a few years. Long-term goals can extend as much as several decades.

Customize your own set of financial aspirations so you have a north star to guide you. Kick off your brainstorming with these common goals:

• Fill up an emergency fund.
• Save for a down payment on a new place.
• Pay down consumer debt.
• Save for future college costs.
• Finish a degree that may lead to higher income.
• Repay student loans.
• Invest for the retirement of your dreams.
• Organize paper and digital financial documents.

Build out an emergency fund

With holiday shopping behind you, your bank account balance may look a little light. With less cushion available, refreshing your emergency fund may be a top priority.

Your emergency fund protects you from unforeseeable, unavoidable costs — like a surprise medical visit, a dead car battery or regular bills after a financial setback. Experts recommend saving enough cash to cover at least three to six months of expenses.

Set up a system that simplifies the savings process. You might create an automatic bank transfer for easy, consistent saving or start to replenish your fund with any windfalls or cash gifts you received during the season.

Bonus tip: leverage financial tools, like Citizens Savings Tracker™¹, to help automate your savings so you can stay on top of your goals.

Create a realistic monthly budget

While you're implementing a strategy for emergency savings, craft a plan for your money as a whole. A strong budget offers a blueprint for reaching your financial goals based on your household income.

A budget doesn't have to be complicated to be effective. Consider the simple but popular 50/30/20 budget, which allocates your income across three categories:

• 50% on needs: rent/mortgage, utilities, insurance, debt, etc.
• 30% on wants: recreation, vacations, gifts, home furnishings, etc.
• 20% on savings: emergency fund, savings goals, investments, retirement, etc.

With this structure as a guideline, you can be sure you're working toward your savings goals every month. You can also target categories that have grown too large and whittle down your spending. And you can assess in advance how future purchases will fit into this budget — because it's never too early to start planning for next year's holiday expenses.

Ready to see how your spending stacks up against the 50/30/20 budget? Enter your numbers into our easy budget tool.

Make a plan for tackling your debt

Between holiday shopping, travel, events and entertaining, you may find yourself swiping a credit card more than usual. As part of your post-holiday financial recovery, you may need to make a plan to pay down your charges. Experts recommend paying at least the minimum amount due and putting extra cash toward additional payments.

Which debts should you tackle first? These are two popular methods for working through debt systematically:

• The debt avalanche method is an efficient path to repaying what you owe. By first addressing your high-interest debt, you'll spend less on interest and have more cash to pay down other debts.
• The debt snowball method is a repayment strategy that can keep you motivated. This plan offers quick wins by eliminating your debts with the smallest dollar amounts first.

Get creative about saving money

Spending less is a smart way to free up cash for savings and debt repayment. And slashing your expenses doesn't have to hurt. With a bit of creativity, you can save money without sacrificing. Try these tactics:

• Cut food costs while still enjoying great meals. Americans spend 11% of their income on food. Try meal planning, switching to generic brands and stocking up on sale items for some savings.
• Cancel unused subscriptions. Do you never use that streaming service, your gym membership or those extra cable channels? Eliminate those services and save that money instead.
• Rediscover your local library. Modern libraries have more than just books. Take advantage of movies, audiobooks, magazines and music. Your library may have subscription-based digital content for free or let you borrow from a "library of things," such as sports gear, games, musical instruments and a variety of tools and tech like 3D printers and mobile hotspots.
• Clean house and have a sale. Your unused household items could have value to someone else. Sift through clothes, toys, appliances and furnishings for things you're willing to part with. You could pocket extra cash while freeing up your closet space.

Ready to tackle your financial goals?

Wherever you are in your financial journey, Citizens is here to help with banking that stands with you and grows with you. With automatic transfers from your checking account to your savings account, you can set money aside and watch your savings add up. Get a jump on your financial path and explore our savings solutions today.