You may have the hang of your budget 11 months out of the year. You may track every penny spent on your ordinary housing, food and entertainment bills. But whether you're a financial superhuman or a mere mortal, you still have one big hurdle waiting for you at the end of every year: the holidays.
It's no expense to shrug off: A 2011 survey from Discover found that shoppers will spend an average of $748 this year for holiday shopping--big bucks to fit into the regular monthly budget.
But if your holiday spending wears down the stripe on your credit card and empties your savings accounts, other expenses could come quickly after that will make you regret it. As soon as the new year hits, you may find yourself shelling out for one or more of these, and forgetting to plan for them can make for a rough start to the year.
Your bill to Uncle Sam
Internal Revenue Service figures show that 111 million Americans receive a refund each year, with an average refund amount of $2,900. But if you've experienced life changes that affect your taxes in the past year, you could be unpleasantly surprised when TurboTax or your accountant informs you that you'll be paying, not receiving, hundreds of dollars.
The likely culprits for this include:
- Unusual income (perhaps from taking a second job)
- A change in household status or dependents
- Switching to a full-time job after being a student or part-time worker
The best preventative measure is to determine your taxes early, preferably as soon as you have all your W-2s, 1099s and other tax forms. Once you know your potential burden, you can start saving for it, perhaps in an online savings account with high interest rates, before you pay on April 15.
Rising health insurance costs
Early next year you may find yourself going to the doctor and paying for an appointment that was "free" a few months before. Or your copay might now be $30 instead of $20.
Changes to your workplace health insurance often kick in on January 1, affecting what you pay for coverage (and rarely for the better). Also, if you have opted for a different coverage option, you may well find new costs associated with it then too.
For instance, your deductible--the amount of money that you have to pay before costs are fully covered by insurance--may have risen. If you have regular appointments with a health-care professional, you may find your out-of-pocket expenses increasing dramatically until that deductible is met.
Be sure to understand fully the choices you're making--and those being made by your employer--when it comes to your health coverage. And if you find that all of your insurance options are unattractive, consider whether you can save with a health savings account.
The costs of heating your home ...
If you live in the hotter parts of the country, January and February may offer a reprieve from summer electric bills. But if you live outside of the sun belt, your energy bills may actually grow as the frost gathers outside. The U.S. Energy Information Administration predicts that prices for natural gas, heating oil and electricity will rise in 2011.
If you're lucky enough to have a programmable thermostat already installed, use it. That way your furnace won't need to run on overtime at 2 a.m. when you're under piles of covers or at 2 p.m. when you're at your desk at work. If you dont' have one already, a new thermostat is a cheap improvement with big benefits.
If you rent, you may have less control over energy-efficient improvements to your home. But nudging the temperature down to 68 degrees in the winter and putting on a pair of socks can still make a big difference in your bill.
... and your relationship
So, as of January 2, the big holidays expenses are over … right?
Not even close! If you are in love (or hope to be), you may find yourself forking out cash for flowers, jewelry, dinner and more on Valentine's Day. The National Retail Federation predicted an average Valentine's spending of $116.21 per person in 2011. That's a far cry from Christmas spending, but it can still be a shock to your checking account, particularly if it hasn't recovered from the earlier holidays.
Some couples do agree to spend little or nothing on Valentine's Day, but be careful that your sweetie won't shun you during the cold, dark February nights ahead before you suggest this arrangement.
No matter what time of year it is, you'll always face expenses. But by always looking ahead, you'll find it easier to achieve your goals regardless of the season.