It’s easy to feel defeated by the ‘winter blues’ when January arrives. The festive cheer has disappeared but the cold weather remains and you’re faced with the consequences of overindulging over Christmas.
The excitement over Christmas can make it seem perfectly acceptable to spend more than you can afford and it’s easy to get carried away or lose track of the amount you’ve spent. Recent research found that the average Brit spends £1,116 at Christmas.
However, once all payments are withdrawn, it’s impossible to ignore the reality of your finances. Getting your money back on track can be challenging, especially for students and young professionals who rely on a small income, but it can be done.
Impulse spending on nights out, gifts and paying travel costs to visit relatives often encourages a flurry of New Year’s resolutions to manage money responsibly. So, what’s the best way to ensure you stick to your financial goals throughout the year?
Living on a budget
Being able to budget is crucial to managing your finances efficiently, yet many students arrive at university without this skill.
To begin, track your essential monthly outgoings (e.g. rent, supermarket shops, bills) and subtract them from your income. Then highlight any costs that can be cut and any spending habits you want to eliminate.
Ashley Tate, chief executive officer at online student bill-sharing tool Split The Bills said: “Becoming aware of everything you buy on a whim can be quite unsettling. You might discover that you need to cut back on unessential payments such as subscriptions and takeaways to meet your goals.
“It’s worth considering cheaper alternatives to some regular payments. These might include making coffee at home instead of buying a latte, buying fewer branded items or going for a run instead of paying for a gym membership.”
If you’re prone to spontaneously spending money using your debit card, withdraw your weekly budget in cash and only spend the money you physically have on you.
While you adapt to budgeting, you may need to adjust the amount each month to ensure it is effective and realistic.
Organise your utility costs
Paying bills for the first time can seem daunting. Placing the responsibility onto your partner or housemate may seem convenient but this can make it difficult to stay on top of monthly costs or outgoings and result in overspending.
Joint accounts allow everyone to keep track of all payments. However, if payments are late, the account becomes overdrawn or if anyone has a bad credit score, all account holders could be left with bad credit.
Ashley adds: “Each person could take on the responsibility for certain utilities, but this can often be too complicated and cause trouble if somebody doesn’t pay their dedicated bill on time.”
A bill-splitting service can sort all utility payments into one monthly fee per person, so everybody is aware of the exact amount they owe while eliminating the risk of late payments.
How to save money
In the YouGov survey, the third most popular New Year’s resolution among respondents was to save money. However, further research found that 15% of Brits had no savings at all, with 22- to 29-year-olds being the worst at saving.
Before you start saving, determine exactly what it’s for, whether it’s a house deposit, car or holiday. Then calculate how much you can afford to save each month and how long it will take to reach the desired amount.
Ashley: “Trying to save every last penny you have can be counterproductive. You’re likely to get frustrated with never being able to go out or treat yourself and then buy on impulse. Saving less can sometimes be more practical.”
Then you can set up an automatic payment to transfer money from your current account into a savings account, to ensure you don’t forget.
You could save more than you think by following creative saving methods. This could include:
• Following the 1p Savings Challenge, which involves saving one penny on the first day and adding another penny each day of the year.
• Buying food shops online to avoid being tempted by offers in-store.
• Using an app that rounds up every purchase to the nearest pound and invests the difference into an online savings pot.
• Selling unused and unwanted items.
• Switching to a savings account with better interest rates.
Increase your monthly income
If your income isn’t enough to rectify your spending blunders, live comfortably and save, it might be worth searching for other job opportunities.
Part-time jobs or freelance work are great ways for students to earn some extra cash and gain experience while studying. Young professionals working full-time may be able to work overtime to make more money or may be eligible for a pay rise.
If a salary increase isn’t achievable, you might need to seek a new role. The beginning of the year can be an ideal time to submit job applications as businesses often gain updated budgets and may have postponed hiring new staff over Christmas.
Facing the consequences of your impulse purchases over Christmas can be overwhelming. However, managing your money smartly through 2020 will help you get your finances back on track and meet the targets you set yourself in the New Year.
A Bit About Our Contributor: Split The Bills
Our mission is to make managing bills easy for shared tenants, students, landlords and letting agents. We create a smart technology to enable an effortless experience.
We take pride in our company by;
-Being a transparent company with no catches.
-Providing customers with a personal and caring service.
-To give you more time to do what you want to do.
We want Splittable to foster happiness in the home, making you a smarter, more effective and less stressed housemate. Our own house sharing experiences have shaped how we approach things, and we try to operate with the same values that we think make for happier houses.