12 January 2024
Monday 15 January is dubbed as this year’s ‘Blue Monday’, thought to be the most depressing day of the year.
Following a costly festive season, the new year can often be a challenging period financially which can contribute to feelings of ‘the blues’. January can be a tricky month at the best of times given December’s wages have to stretch further than normal, but with the cost-of-living crisis weighing on everyday finances recent research* from Quilter, gathered by YouGov, found that a third of people (29%) are in a worse financial position than they were this time last year.
The pressures of increased prices and high interest rates are expected to remain for some time yet, so it is vital that people take steps to improve their financial situation sooner rather than later.
The new year presents the perfect opportunity to take stock, review expenditure and reprioritise to ensure you are in the best possible financial position for the year ahead. Financial worries can play a significant role for those struggling with their mental health and wellbeing, so taking steps to improve your finances now is a great way to help beat the blues while setting you up for the year ahead.
Claudia Button, financial planner at Quilter, discusses her three key tips to help you boost your finances in 2024:
1 – Make a budget for the year ahead
“Now is the perfect time to take stock of your incomings and outgoings and to put a plan in place to help you budget effectively during the year ahead. As a starting point, it is a good idea to look back on the past three months of your bank statements to decipher where your money is being spent. This will give you an idea of the regular, monthly payments that go out as direct debits, as well as other outgoings on everyday things such as petrol or your daily coffee on the way to the office. This may help highlight unnecessary spending and where you might need to make any, or even where you have money left over that you could put into savings.
“Once you have a good understanding of your typical monthly finances, write out your budget and allocate specific amounts for the things you will need, making sure to keep it realistic. You will be more likely to stick to a budget if you have a clear plan, but it can also be altered as and when your circumstances change. It is important to refer back to it regularly to hold yourself accountable – where applicable, as a couple or family.
“It would be unrealistic to expect to stick perfectly to your budget every week, but in general you should be aiming to have an overall good month to ensure you are still on the right path. If you have a week where you go over budget, make a conscious effort the following week to stick to your budget, if not come in lower, to help you strike the right balance.”
2 – Boost your savings where possible and put your money to work
“Though cost-of-living pressures may have reduced the amount of money you have available to save, it is very important to maintain the habit of saving wherever possible. Something is always better than nothing.
“We often like to save for something in particular, but you should make sure you at least have a rainy day fund in case of emergencies. Aim to have three to six months of expenses in this pot and top it up as soon as you can if you need to dip into it.
“If you are able to budget a specific amount to save each month, it is worth setting up a direct debit or standing order for your savings on the day you get paid. If your budgeting is well managed, you will find you won’t have anything extra to save at the end of the month. However, double check to see if you have anything extra you could put away as a result of any cutbacks. Securing a good interest rate on these cash savings is very important and with potential rate decreases on the horizon, opting for a fixed-rate savings account may be a wise idea to ensure a consistent return on your savings. Given your emergency savings may need to be accessible in the short term, opting for savings accounts or fixed rate bonds offering the best returns will help you minimise the eroding effect of inflation.
“Once you have an emergency cash fund saved, it is a good idea to start looking ahead to the longer term and putting your money to work in the stock market. Cash may feel like a safer place to be given higher interest rates, but cuts to central bank interest rates can act as an immediate stimulus to financial markets. If you are sat in cash, you risk missing out on the best days which could cost you in the long run.”
3 – Seek help if you need it
“Talking about your finances can be difficult, but if you have financial worries then it is important to remember that there is help available and you should speak to someone rather than carrying the burden alone.
“Talking to a friend or family member is a good place to start but services such as MoneyHelper and charities such as Citizens Advice or Step Change are available for free support, including debt advice, if necessary.
“Where possible, seeking professional financial advice can also be highly beneficial as a financial planner will be able to help you analyse your finances and put together a longer-term plan specifically tailored to you, often with the help of cashflow analysis.”
*All figures, unless otherwise stated, are from YouGov Plc. Total sample size was 2,001 adults. Fieldwork was undertaken between 11th - 12th December 2023. The survey was carried out online. The figures have been weighted and are representative of all GB adults (aged 18+).
