Just like the physical seasons change throughout the year, we also experience financial seasons. Recognizing which financial season you’re in can help you better understand your current financial situation and how best to adjust to it. Just like you don’t want to wear a parka in July or a bathing suit in January, trying to operate by the rules of one financial season when you’re actually in a different season is unhelpful at best and detrimental at worst.
Spending Season
If you’ve ever felt like money just keeps flowing out of your bank account and you can’t really stop it, that’s a sign you’ve experienced a season of spending (and who hasn’t?). Particular times of the year tend to be seasons of spending—especially around the summer and the holidays. During both of these times, many people travel and have more social gatherings (plus gifts for the holiday season). Certain events such as moving, having a wedding, or having a new baby can also trigger a season of spending.
How to handle it: The key to handling a spending season is to prepare for it. This means either saving up in advance for these expenses or factoring in that you might not be able to save for other goals during this time. Because spending seasons typically happen at certain times of the year or around life events, you usually have enough time to prepare if you think about it. If not, having an emergency fund can also help get you through these times.
Savings Season
In between seasons of spending, you may experience a season of saving. During this season, you find yourself with extra cash built up in your checking account because you don’t have as many expenses. If your budget is tight enough that you never feel your checking account expand, you may still experience a savings season during your annual bonus time or tax refund season.
How to handle it: Take an active approach to savings during this season by setting up an auto transfer to your savings account to make sure you capture that extra cash. If it comes in a lump sum such as a bonus or tax refund, set aside a specific amount you want to save before making any purchases.
Hibernation Season
During a season of hibernation, you aren’t actively working on your finances—maybe because you’re focused on some other your life. Perhaps you’ve already set up a plan and it’s on maintenance mode for now, or maybe you just aren’t feeling the motivation to tackle your finances.
How to handle it: Don’t try to push through it. Focus your energy on another priority that feels more interesting or motivating to work on. Making progress on another area of your life and giving yourself a break from your finances could renew your bandwidth for taking it on down the road.
Action Season
This is when you’re feeling jazzed about working on your finances (or at least feeling a little buzzed about it). You feel motivated to do things like create a budget or a debt payoff plan. While this can happen at any time of the year, it’s most common in the fall and spring.
How to handle it: Harness your energy to complete any particularly challenging financial tasks—especially those that include multiple steps. Also focus on setting up automated systems for paying off debt and saving so you can continue to make progress even in your hibernation seasons.
