We know January can be the hardest financial month of the year for people. If you feel like 2025 is the year you want to start afresh with your finances, we can help. There is no quick fix if you’re struggling with debt after Christmas and you feel like payday is so far away. Read on to learn more about how you can start tackling your debts in 2025.
Tackling The Christmas Debt
December is the most expensive time of year, and many will find themselves with a big credit card bill or buy now, pay later bill in January. With the cost of living continuing to rise, it’s no surprise that 1 in 3 people have spent over £500 over the festive period. On average it can take 4 months to pay back and can put you in a cycle of borrowing every festive season. If this sounds familiar and you’re already worried about the upcoming payments, you don’t have to suffer in silence.
January is Financial Wellness Month
With a new year comes a renewed sense of motivation in all areas, and if improving your finances is a goal for 2025, now is the perfect time to start. Financial Wellness Month serves as a reminder to slow down after the festive season and prepare your finances for the new year. We’ve listed three ways you can tackle your finances this January.
1. Set Financial Goals
Want to pay off all your debts? Be able to pay for a family holiday in full before getting on the plane? Or maybe you’d like to pay for Christmas without using buy now, pay later.
Whatever your goal, working towards something can keep you motivated and help you progress. You’re also more likely to stick with a goal if you can visualise it happening month by month, and see how far you’ve come. Some goals are time-scaled and will take months or even years, it all depends on what you want to achieve with your money goals.
Remember to make them realistic and clear, with key steps broken down so you know the exact actions you have to perform to reach the end goal. Unachievable goals which don’t fit your income or lifestyle will leave you feeling demotivated.
2. Create a Budget for 2025
Budgeting is vital to create a healthy relationship with your money. You can read our budgeting guide to learn more about how to best handle your finances.
The first step to creating a budget is working out what you spend your income on. Once you are able to see what you spend your money on, you’ll have a better idea of what you have left over after all your essentials like your mortgage/rent, food bills, etc. What you have left is known as your disposable income, it can be used for non-essential purchases.
3. Start Saving
When you’re paying off debt having a healthy amount of savings is the best way to ensure you won’t get back into debt. It’s always a good idea to have money saved for emergencies (emergency fund), and the amount you should have saved varies from person to person. Take into account what an emergency means for you and what you want the money to cover if an emergency comes up. It’s suggested to have 3-6 months of living expenses saved in case you lost your job. People who have pets also like to pay emergency vet bills out of their fund, or if their car needs repairing. You can also save for upcoming events like birthdays, Christmas, Valentine’s Day or goals you’re working towards like a holiday or perhaps a new car.