How to manage post-Christmas finances

Although Christmas is an exciting and fun time for many, as a way of giving their loved ones presents, hosting dinners and taking time to relax, after the holiday season is over, some people are finding it hard to recover financially. New research from Creditspring has shown that four in ten UK parents don’t financially recover from Christmas until spring, with some still repaying festive costs as late as autumn.

They also feel a pressure to deliver a ‘perfect’ Christmas, which is driving overspending, and 41% of parents admit they spend more than they can afford. We spoke with chief risk officer at Creditspring, Tamsin Powell to shed light and advice on the situation.

Why are post Christmas finances so difficult?

“People unfortunately overspend at Christmas. It’s very easy to do,” Powell explains. “There’s a perception that there’s this perfect Christmas which is inspired by a lot of the movies and things on TV.

“Also, in January you’ve got that gap of pay and the pay cycle,” she adds.

“It’s often a very long month, especially if businesses pay their staff early in December to help out but then it leaves a longer time post-Christmas, so a lot of people are trying to catch up.”

Powell adds: “A lot of people are also buying gifts on buy now pay later schemes with their first payment starting in January. I think it’s a real crunch time as they realise what they’ve spent and the costs start mounting up.”

How can people prevent overspending before the New Year

Powell explains that at this stage it is all about budgeting. “That’s what we have been trying to get out there and say to people – try and be realistic with your budgets and be honest with yourself about what you spend and try and stick to it,” she explains.

“I think we’re all guilty if we come to the wrapping stage and realise just how much we’ve bought. We should keep lists as we go along but we don’t.

“It’s the same with the food shop at Christmas. It’s very easy to get carried away and the adverts all lead you to having the best.” However, Powell says you can “find alternatives at a much more reasonable cost that are the same, if not better.”

“It’s all about budgeting at the start and then finding different ways to gift, whether that’s food gifts, using second-hand sites, charity shops or homemade gifts that often can be a lot more special,” she adds.

“Another way is Secret Santa instead of having to buy for everyone. Try and buy a really thoughtful gift for less people.”

How can you manage post-Christmas finances?

“Once again, it’s important to budget,” Powell says. “Be honest with yourself. Ask where do you go from here and how can you recover from the situation if you have overspent? I think it’s very easy after Christmas with all your New Year resolutions to start spending, whether that’s gym membership or fitness equipment and supplements. Try and think of different ways that you can get healthy for free, like walking, running, second-hand equipment, at least until you know if you like it and if you’re going to be able to stick to it.

“If you do want to do a gym membership, try not to sign yourself up for a year in case you don’t stick to it,” she adds.

“Also, when you look at your budget in the new year, look at the things that perhaps you’re spending money on now that you haven’t used for a long time.

“Think of subscription services and things that you’ve signed up to a while ago.”

Powell also suggests the use of free budgeting tools. “A lot of banks offer these as part of your bank account or various sites where you can download helpful budget planners,” she explains.

“Also look at the gifts you received and ask if you need them all. Is there anything that you can regift or perhaps sell on second-hand sites? It may seem mean but I think people would rather you do that if you are struggling and don’t need all those gifts,” Powell adds.

“Something else that is rather important is about trying to put away a little buffer pot for unexpected costs that may come. Even if it doesn’t seem much, if you can put away something for emergencies it means you can try and start good habits in the new year. You’d be amazed at what a little buffer can do in an emergency situation.”