Rebuilding savings after holiday spending

The holiday season can bring plenty of joy, but it often leaves a lasting impact on personal finances. After months of holiday spending on travel, gifts, and celebrations, many find themselves needing to rebuild savings and regain financial stability. Half of all American adults will take on debt to pay for holiday expenses, and 37% will spend two or more months paying off that debt.¹

This article will explain the importance of rebuilding a savings plan to promote financial stability and offers tips and strategies to get back on track after the holidays.

Assess your post-holiday financial situation

The first step to achieving post-holiday savings recovery is to fully assess the current state of one's personal finances. Reviewing bank statements and receipts to do with winter finances can help provide an understanding of how money was spent over that time. This evaluation is a good way to identify spending patterns and determine the extent of any debt accumulated over the holidays.

Build a post-holiday reset plan

The next step is to create a post-holiday reset budget. This includes developing a money management plan that accounts for income and expenses while setting short-term and long-term savings goals. Whether focused on debt repayment or rebuilding an emergency fund, it’s essential to create a structured plan that outlines how much should be set aside each month.

Building a budget can help people regain control over their finances and recover from holiday expenses without further strain.

Here's some guidance on how to effectively manage and rebuild finances after the holidays:

Expense tracking is key

Expense tracking is an important part of any personal budget plan. Using money management apps, such as an expense tracker, can simplify the process of monitoring where money is going and benchmarking progress toward savings goals.

For those who prefer manual methods, tracking expenses with spreadsheets or bullet journals is equally effective. Recording every expense — including groceries, utilities, and entertainment — can reveal where cost-saving adjustments can be made. Simple changes like meal planning, buying in bulk, and using coupons can significantly cut costs and boost savings.

Avoid overspending after the holidays

Rebuilding savings requires discipline, particularly when it comes to controlling spending. To avoid overspending, consider setting spending limits for different spending categories and making a conscious effort to delay gratification — waiting before making impulse purchases often leads to more suitable financial decisions.

Celebrating financial milestones can motivate people to stick to their goals — like rewarding oneself for saving, even if it's a small gesture. And shopping smart by leveraging offers, cash back rewards, or services like buy now, pay later can help spread out costs over time.

Generate extra income to boost savings

When holiday spending leaves savings depleted, generating extra income can be a powerful way to rebuild faster. Popular side hustles, such as freelancing, driving for rideshare services, or online tutoring, offer flexibility and the chance to earn money to put toward savings goals.

Another simple way to generate extra income is to declutter and sell unneeded items. Platforms like online marketplaces make it easy to turn unused goods into cash. Additionally, reviewing and negotiating recurring bills — such as cable, internet, or cell phone services — can reduce monthly expenses and free up funds for savings.

Ensure you have sufficient emergency savings

Having an adequately funded emergency savings account is crucial to financial stability. This fund provides a safety net for job loss or unexpected expenses, like medical bills and car repairs, ensuring that financial setbacks don’t derail overall stability.

To maintain and grow an emergency fund, it can be a good idea to try automatic transfers that direct a portion of income each month into a savings account. A number of money saving apps with automated savings options can be a good fit for this.

Beat the post-holiday blues with PayPal

The post-holiday blues are a common experience that can be worsened by the financial impact of holiday spending. PayPal offers a range of tools and features to help get finances back on track.

Whether rebuilding savings, managing post-holiday debt, or simply trying to regain control of finances, PayPal Savings² could help.