Fix your finances after Christmas

Budget to Build Confidence

Budgeting is a small but meaningful way to ease larger financial pressures that may have been brought on or exacerbated by Christmas spending. Those little lifestyle changes, whether it’s walking to the shops instead of driving, or drinking a soothing cup of tea instead of wine, will save you cash that can help sort out your finances.

And there are plenty of free mobile resources that you can use to calculate a monthly, weekly or even daily budget. Emma breaks down your various subscriptions; Money Dashboard is completely free and helps to categorise your spending; and Plum even uses a sophisticated AI to provide a realistic and affordable saving amount.

You could also adopt mindful approaches to budgeting. For instance, waiting an extra 48 hours before making a purchase can help to cut out impulse spending.

Alternatively, you could decide that Tuesday is a 'no-spend day': a day where you spend absolutely nothing, ever. Well, it could be any day you choose. But committing to no-spend days is a simple way to start thinking proactively about budgeting.

Rounding Up

Another way to save money this January is by ‘rounding up’. This is where you round up weekly costs, such as your weekly food shop, haircut, coffee – you name it – to the nearest pound, and then save what’s left.

For instance, if you buy a sandwich for £2.60, then the remaining 40p gets automatically transferred to a savings account of your choice.

Just think what you might have saved over the holiday period by rounding up.

The advantage of using this method is that you:

• Don’t notice the money being saved.
• Set and forget. Once you’re set up, all you need to do is sit back and watch your savings grow every time you buy something.
• You could even earn interest on the savings, and see it grow even more. This depends on the kind of saving account you’re using, and the bank or building society you’re with.
• By relocating money from your ‘spending account’ into a different savings account, you might feel less tempted to spend it.
• Build a strong saving habit which will set you in good stead for the year. This could even double-up as a belated New Years’ resolution…

Moneybox and Plum are two companies who offer this seamless saving service. But remember to keep in mind that it’s often best to weigh up your options or seek financial advice if you're unsure, because round-up saving won’t make sense for everybody.

Finance is at the forefront of our experience with modern technology, but you’ll need a smartphone or tablet to use these apps.

Being mindful about money is all part of your financial wellbeing. Whether it’s by having a clear monthly budget or planning bills and repayments, stepping back to organise your finances is a great habit to build.

Know Your Debts

Not all debts are equal. If you’ve got multiple loans that are stacking up, try to make a list. Which one has the highest interest rate? Which debts will leave the largest impression on your credit score? By knowing your debts, you can pay off the fastest-growing ones first, saving you money in the long-term and putting yourself into a more secure position to begin clearing the rest.

Consolidating Debts

One way to start clearing your debts is to take out another loan. It sounds counter-intuitive, but you can take out a loan with a lower interest rate and use it to pay off an existing loan at a much higher one. Of course, the second loan would still need to be cleared, but it’ll be less daunting than before and can actually save you money in interest because of its lower APR.

Breathing space

Being in debt can be overwhelming. And although your credit score can recover, your current mental health might need more immediate attention. So, if you’re worried about your debts spiraling out of control, Breathing Space can help. This scheme gives you legal protection - preventing creditors taking action against you, should you find yourself unable to pay. And that security might be all you need. Respite from interest, fees and court action can give you the freedom to look after yourself. Speak to a debt advisor to begin the process. They’ll let you know if you’re eligible and will help you organise your finances.

If you’re feeling overwhelmed, and want to speak to a free advisor, check out StepChange, a UK charity who provides reliable debt advice.

Or go to the Money Advice Service, and use their tools and calculators to plan your route out of debt - alongside accessing free and impartial advice.

Alternatively, Citizens Advice offers accessible advice on debt and money.

And don’t be afraid to speak to the people you love. Although it might seem embarrassing at first, having a reliable, trusting group of friends and family to turn to might provide the stability and reassurance that you need.

You’re never alone when it comes to financial pressures.