Here's how to overcome the January financial blues

After the holidays , January hits a little bit differently. The parties are over, debt payments are due and it can feel like there’s nothing to look forward to. You may be able to minimise the effects with some planning and other steps to turn things around , financial experts say. “ Financial stress can be temporary,” says Tonya Rapley, financial educator and founder of the millennial money and lifestyle blog My Fab Finance. She suggests focusing on small steps such as paying this month’s bills and then reminding yourself that you can recover from December’s overspending . Here are a few more ways to fight this month’s financial downers: The new year is a great time to create or update a budget, which can give you back a sense of control, says Mike Croxson, chief executive of the National Foundation for Credit Counselling, a non-profit financial coaching organisation. The popular 50/30/20 budget, for example, suggests putting 50 per cent of your income towards needs, 30 per cent towards wants and 20 per cent towards savings and any debt payments. You can adjust those percentages as needed, especially if you live in an urban area with high housing costs. “The best way to get control back is to make a plan,” Mr Croxson says. “You can get back on top of this and back to where you feel good about your finances.” With interest rates higher than they were a couple of years ago, credit card debt is also more expensive, which makes paying it off a financial priority. How exactly you do that is up to you, Mr Croxson says. “Paying off the highest interest rate balance first makes the most common sense, but for some people, paying off the smallest dollar amount first is most important because they feel like they accomplished something,” Mr Croxson says. Small wins can give you momentum to continue. Online calculators for those two methods can help you stay on track. If you purchased holiday gifts using buy now, pay later, which allows shoppers to split payments into multiple instalments, then it’s important to note when those bills are due, says Christine Alemany, chief marketing officer for i2c, a global banking and payments platform. Ms Alemany suggests tracking your BNPL due dates with a financial management tool or spreadsheet to avoid late fees or interest charges. “The variety of payment methods that consumers now have gives them the option to choose what’s best for them,” she says, but “that convenience needs to be balanced by discipline”. Amid repayments, it’s also important to find a way to save money, Mr Croxson says. “Having a savings line item in your budget is a critical step for virtually every consumer, even if it’s $20 or $25 a month,” he says. “There will be an emergency, and you will need it.” Being able to turn to savings in the future also helps you avoid building up debt again, he adds. If an expensive item you bought or received as a gift in December breaks in January, it is critical to know your refund rights, says Wayne Hassay, partner attorney for LegalShield, a legal services provider. He suggests keeping track of all paperwork related to the item and any warranty attached whenever you make a big-ticket purchase. In some cases, paying with a credit card can give you additional protections, he adds. If your pricey new electronics break, don’t hesitate to follow up with the retailer or brand until you get a satisfactory response, which could be a refund or a new product. Working to pay off debt and get back on a budget in January can feel lonely because it’s such a solo activity, which is why it’s helpful to reach out for additional support, whether that’s from financial professionals or friends and family. “Be honest with people,” Ms Rapley says. She suggests sharing in a friend group chat if you are looking to scale back and spend less because you’ll likely find encouragement that can help you stay on track. “That communication is definitely important,” she says and can help you feel less alone – and with more good things to anticipate in the year ahead.

Here's how to overcome the January financial blues

Make a budget, pay off debt and build up your savings to help you to recover from overspending in December, experts say