It’s probably safe to say that January is the most financially difficult month of the year for most people. Many of us will have overspent during the festive period. And since we all probably got paid earlier than usual in December, our wallets may now be stretched too thin, leading to financial struggles.
This, unfortunately, is the current reality for more than a third of UK households. A new report by Lowell has revealed that because of earlier pay dates in December, 39% of UK households will struggle to afford January 2021.
UK households struggling financially in January
2020 was quite a tough year all round. The pandemic hit our personal finances hard. In fact, 51% of UK households are expected to be worse off financially due to Covid-19, according to Lowell.
With 93% of the people having had their payday in December brought forward, it’s no wonder that more than a third of UK households will struggle financially this month.
Lowell says that most are likely to have started feeling the financial strain on the 20 January, which falls about a week before the next payday.
But given the large percentage of households that are expected to struggle financially this month, it’s more than likely that many started feeling the strain way before the 20 January.
How are people planning to cope with January’s financial struggles?
Not surprisingly, most people plan to use credit or dip into their savings to fund the long month of January.
Lowell found that 23% of people plan to use credit cards to fund their expenses this January, while 17% will use money from their savings. A further 10% plan to take up loans while 9% will turn to payday loans.
There are also those who plan to borrow from family or friends to survive (about 8%).
Are there any healthier options to cope with January’s financial struggles?
It’s completely understandable if you’re struggling financially this January.
The good news is there are several strategies you can use to try and get through the remaining days to payday instead of taking out a high-interest loan and essentially racking up more bad debt.
1. Work out how much money you have
Work out how much money you have left and then make a budget.
A budget will help you identify all the bills and expenses you need to cover, which ones you need to prioritise, and how much to allocate to each. You’ll also discover where it’s possible to make cuts and stretch your money further.
2. Rein in unnecessary expenses
To avoid more financial struggles this January, resist the urge to buy anything you don’t actually need. Whether it’s new clothes or a pick-me-up to fend off the January blues, it can wait.
3. Hold off renewing your subscriptions
If any of your streaming subscriptions are ending between now and payday, hold off renewing them for the time being. There are plenty of free streaming sites you could explore if you still crave entertainment.
4. Seek extra sources of income
There’s a long list of possible side gigs, some of which you can do from home, to make some much needed extra cash to help with January’s financial struggles. For inspiration, check out our article on side hustles you can do from home.
5. Sell unwanted stuff
If you have a load of unwanted and forgotten stuff lying around the house, such as old toys, clothes, books and DVDs, then this is a great time to get rid of them and make some money through platforms like eBay.
6. Plan your meals until payday
By planning your meals, you’ll know exactly how much you need to spend on groceries. You’ll be able to avoid last-minute trips to the supermarket or takeaways, which can be very expensive.
7. Spend your reward points
If you have a reward credit card or any other loyalty scheme that gives you points when shopping, now might be a good time to put these points to use by redeeming them for essentials like food and toiletries.
Takeaway
If you are struggling financially this January, don’t panic or lose hope. A few small but significant changes could make things a little bit easier and help you cope until your January payday.
