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New Year, new you: how to start afresh with your finances

January can be a tough month financially, but it's a great time to start building good habits

There’s no way around it — for most of us January is the month of the debt hangover, when payday seems very far away.  Somehow we become money-blind at the turn of the year. Calls to debt advice charities are the lowest of the year in December, and the highest in January.

How on earth did we manage to rack up so much debt? You don’t have to look too far back.  Black Friday. Cyber Monday. Christmas.  New Year’s Eve. Keeping the kids entertained for weeks. The January sales...

Dealing with overspending is similar to going on a diet.  A New Year diet may help you lose half a stone, but unless you think about your habits long-term, you’ll probably put it straight back on again.  And it’s the same with credit.

So now is the time to take a good look at our money lifestyles – to find out exactly where the money goes each month. Here are some tips to avoid the crash diet and make a change which will last:

  • Don’t ignore the problem. Open the statements. You’ll feel better if you know you’re dealing with it.
  • For one week, see if you can account for every penny you spend. That bar of chocolate when you get petrol.  The magazine to read on the bus.  The coffee you had when you met your friends. The takeaway you bought because you were too tired to cook after work. It’s about understanding what you spend, where you spend and how you spend. 
  • Running a household is like running a small business. So give yourself a couple of hours, sit down with a pad or a spreadsheet and list all the bills you have to pay every month to keep everything going. Those are the first priorities. Debt Advice Foundation has a great Budget Planner which may help. 
  • List debts such as your car, credit cards, catalogue payments and personal loans. Then all the rest – paid-for TV services like Netflix and gym membership. Now add up your income and work out the difference. Hopefully there’s money left over every month so you can start to pay the debts off. If not, you may need to look at getting further financial advice.
  • Think about next year. Add up how much you really spent over Christmas and New Year, including presents, bubbly and food. Divide that by 12 and start putting money into a savings account, avoiding the temptation to get more credit and hopefully, prevent next January from feeling like the month of doom.
  • Remember that banks and credit card companies are very different. The money in your current account is yours – and you may get interest or cash-back deals. A credit card is always a debt. Make sure you're in control of what you're spending on your credit card so you know you can pay it back.  

If you are struggling with your debts, remember you can contact a free, independent debt advice charity such as Debt Advice Foundation. Their free and confidential helpline is available on 0800 043 40 50 or visit

Other impartial debt charities include StepChange and National Debtline




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