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Avoid Being Broke in January

by Sarah Bell (follow)
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Life Skills (68)      Easy (26)      Money (18)      Family (5)      Festive Season (1)      Finance (1)      Budgeting (1)     
You know the old story, Christmas time was wonderful with parties to attend and presents for one and all, by New Years Eve your funds were running low but you were determined to have a good time anyway, and by the time January rolls around you've got nothing in the bank account and nothing in your wallet but loose change and a few maxed-out credit cards.

empty wallet
Image courtesy of graur razvan ionut / freedigitalphotos.net

If you follow this simple plan, you can avoid being broke in January next year.

Time: 30 minutes

Optional - computer

You can do this at any time in the year. January is best because the sting of having no money is still fresh in your mind, but even later on in the year it can be done.

Sit down when you have a spare half an hour when you won't have any distractions and take a realistic look at how much you spend over the festive season.

Write out a list of all the things you would like to buy and spend money on. These could come under the categories of "Presents", "Entertainment", "Parties", "Holidays" or whatever else seems appropriate to you.

Then write an estimate of how much you would like to spend on items experiences or people. For example, if you have kids to buy presents for, you could set a budget for each of them, or a partner or each friend or family member you like to indulge.

empty wallet
Image courtesy of Stuart Miles / freedigitalphotos.net

Once you have covered absolutely everything you can think of, go over your list and look again, until you can come to a realistic figure (one that fits your income and expectations) that you will need to have the kind of festive season you want to have.

Image courtesy of stockimages / freedigitalphotos.net

This figure can then be broken down into a monthly figure. Say, for example the figure you came to was $600 for the festive season. If you're starting in January, you have 12 months to save up for it, so by putting $50 away every month you will have $600 to spend by December.

So great, you've worked out how much you realistically want to have to spend by December, and how much per month (or per week or fortnight depending on your income cycle) you need to put away to achieve that. Now what?

You know if you just leave it in your regular bank account or stashed under a mattress you're going to spend it - so a good is to set up another high interest bearing bank account for just this purpose. People used to call them Christmas Clubs, but the term seems to have gone out of fashion. Now you can find them with virtually any bank and if you shop around, you're bound to find one which doesn't have any fees attached.

If you then set up a regular deduction from your main account to come out automatically on pay day, that small amount will come out and go straight into your Festive Season Fund. Don't look at the account or pay it any attention at all, don't think of it as your money that can be used to pay for other things, for eleven months it doesn't exist.

Then you can sit back and relax, and when December rolls around, you'll be able to withdraw it all and have a great time without having to dip into living expenses or use a credit card once!

Image courtesy of Stuart Miles / freedigitalphotos.net

#Life Skills
#Festive Season
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