The holiday season has come and gone, but the aftermath of gift giving and social gatherings may leave a major dent in some people’s wallets.
“If people don’t follow a budget then they do tend to feel the effects of the holidays on their financial lives,” said Phil Schuman, IU director of financial literacy. “The holidays tend to be a tough time to maintain discipline with finances because there are so many added social and emotional pressures that could cause people to dig themselves into a financial hole.”
That can be especially true for college students whose budgets might be tight to begin with. The good news is the new year can be a time to take a hard look at your financial choices and make significant changes to get on the path to financial success.
Schuman has provided a few tips for getting on the right financial track:
- It’s never too early. Finances play a huge role in our lives, whether student or professional. The decisions you make today could affect the rest of your life. “The number one source of stress is finances,” he said. “If students engage in positive financial decisions while they’re in school, not only will they be less stressed during school, but they increase the likelihood that they will be less stressed after they graduate.”
- What role does money play in your life? No matter your level of income, Schuman said, everyone should think about what role money plays in your overall life goals. Then develop habits that can help you accomplish those goals.
- Create a budget and be specific. Budget your fixed/necessary expenses first and set an amount to spend on entertainment, clothes, etc. Try to set aside money for savings, and be specific. Don’t just say “I will save more money this year.” Set specific yet realistic goals and outline ways you will achieve those goals.
- Be yourself. One of the biggest pitfalls people fall into, especially young people, is trying to keep up with the Joneses. While it can be tempting to rack up credit card debt to keep up with the latest trends, in the end it can lead to financial ruin. “What you need to do to be financially responsible is know what you’re trying to do in your life, understand how finances are going to play a role helping you accomplish it and then make financial decisions that put you in the best decision to help you get there.”
- Ask for help. Setting up a realistic budget and navigating through retirement plans and the best savings options can be overwhelming. Schuman suggest turning to experts for help. IU’s MoneySmarts team offers financial services to IU students, faculty/staff and alumni.
More information, including ways to schedule an appointment with a MoneySmarts team member, is available on the MoneySmarts website.