Cast your mind back a few weeks. It’s the weekend before Christmas and payday has come a whole lot earlier than usual.
That shot of much-needed cash for all the festive expenses was great, but now we’re in the midst of January how do you make that pay packet last even longer for the barren January landscape? Even without a long wait between paydays, dealing with the excess of Christmas spending can make January a tough month for many of us with money.
When it’s also for many the time we find cash for upcoming holidays as well it can add up, which makes dealing with this shortfall a daunting prospect. All in all, it adds up to January being one of the most stressful times of the year financially.
The good news is it doesn‘t have to be that way. There are plenty of ways to make better use of your finances this month, and they could be the start of long-term habits that allow you to improve your money management.
1 - Cut back
If December is about excess, January provides the perfect opportunity to showcase a thriftier side. Whether it’s passing on the office canteen in favour of home-cooked food or getting fit on a budget, making a New Year’s resolution which cuts back on spending will give you more money to play around with.
You could start dry January to cut back on the costs of alcohol and taxis on nights out (if you drive instead), particularly as you can get unlimited alcohol-free beer for the price of a single pint at Brewdog all month. Look at your streaming services - do you use each one? Even if you cancel them and reactivate as and when you use them you will save in the long term.
Whatever you do, aim to cut back on spending on at least one thing for a whole month and then see how you are with it at the end. If you’ve missed it then you can start again, but it may very well be that you can continue without that expense permanently.
2 - Learn to budget
If you are a budgeting guru already then we applaud you, but this article is probably not for you. If, however, you typically overspend in the wrong areas, January is the perfect month to start being more organised with your money. It will allow you to limit the need to use credit cards, your overdraft or dipping into savings just to make ends meet.
Work out exactly how much goes out and at when each month. If you still have some bills to come out towards the end of January, make sure you set aside some cash for those. You can also speak to your providers to see if you can bring forward payment dates in the future, so they’re more in line with your pay date.
It could also be a good idea to set up a second bank account which you use to pay bills and transfer the full amount for them from your wages after payday. Certain bank accounts, like the and the app Squirrel, will set aside the cash for you and transfer it back just before the bills are due.
Doing this should give you an idea of how much money you have for essential purchases and payments like bills and food. You can then work out how much you have remaining for other spending during the month.. If you map your money out beforehand, it should (in theory) make it less easy for you to overspend on the wrong things.
Read our guide to budgeting.
3 - Analyse your bills
It isn’t just your general spending you could cut back on, there are potential savings elsewhere too. The first place to look is your bills.
Once your budgeting is sorted, shop around to see if you can save money on everything from your gas provider to your car insurance. Also, check if you need everything you are billed for. Things like electricity and water are essential but could you use a pay as you go mobile or sim only contract instead of a mobile phone contract and/or landline?
If you can get a better deal elsewhere, take it, providing you are not tied down by any specific contracts. And if you are, make a note of when they expire. When they do you can switch over to that better deal elsewhere, which you can find via price comparison websites such as GoCompare and Compare the Market.
4 - Cut down transport costs
If you can walk or cycle to work, or carpool, you could reduce your costs significantly this month (as well as help the planet in the process).
It’s not just commuting you could consider, see if you can walk to the shops, friend’s houses or anywhere else you plan to spend time. The exercise won’t be a bad thing either.
5 - Reassess your borrowing
Are you one of those people that dip into their overdraft every month? Are you too reliant on credit cards? It sounds clichéd but January is the perfect time to reassess your financial situation, and it could be that there are more efficient ways for you to handle your finances.
Looking at how you borrow each month could be a good way of reducing the impact of your debt. If you are going overdrawn by £200-£300 each month, could you instead use a credit card which you pay off in full every month to borrow the same amount interest-free? If your credit card fees are too high would you be better served by a consolidation loan, or transferring your balance to a card with a better deal?
You can then put any future savings towards reducing your debt, making that impact less as the year goes on.
6 - Start a side hustle
It’s not just about reducing your costs this month, you could actually figure out a way to increase your income. Selling unneeded items in your house is one way to start, be it anything from unused furniture, clothing, electrical equipment or even those unwanted Christmas presents (we won’t tell).
7 - Socialise at home
And finally, it’s not just making money that your home can deliver, but also saving. The costs of going out to see friends quickly ramps up, with eating out and even a few drinks at the pub damaging your wallet.
If you can have that get together at home instead you can save money on the costs, especially if you all chip in for food and drink or work on a rotational basis. Start a regular ‘Come Dine With Me’ competition or take turns entertaining for sporting events, and remember you can still always have a cheeky pint in the pub afterwards.
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