Many people are used to starting the new year with a financial hangover as spending pressures ramp up towards Christmas.
But setting financial new year’s resolutions a bit early, before all the festive spending has done its worst to your finances, could make it easier to get your budget back on track when January comes around.
Making some plans right now could even give yourself a head start in achieving your money goals for 2025.
Here are some ways to help lay the foundations now to help make sure your January finances get off on a good footing:
1. Remember your December pay cheque may need to last for five weeks, not four.
Often, people will receive their pay slightly earlier in December. While this is handy for getting through the festive period, it also means stretching finances out for longer until the next payday.
It could be worth dividing your leftover pay, after bills have been accounted for, by the number of weeks, or days, it needs to last for until the next payday in January.
That way you’ve got a general idea of what your typical daily or weekly spending limit should be, which could help reduce the chances of blowing the lot over Christmas and spending January overdrawn.
2. Set a budget.
As well as “surviving” until January payday, it’s also wise to set a longer-term budget for the new year and beyond. Perhaps there might be some time during the festive holidays to look over your finances.
Chris Henderson, savings director, Tesco Bank says: “Plan how much you’d like to spend per month on weekly essentials, entertainment, or ‘nice-to-haves’, and pop it all into a planner.
“You can jot this down on paper or use one of the many apps out there to help you. And if you want, let people know your plans.”
He highlights the TikTok trend of “loud budgeting” whereby people are encouraged to openly discuss their financial goals and explain why they don’t want to make purchases.
This could be useful to deploy if you’re feeling under pressure to accept too many invites for social events over Christmas.
3. Ditch little-used subscriptions.
Go through your bank statements and see if there are any subscriptions you could get rid of or renegotiate. Many gyms will be gearing up to welcome new customers starting fitness regimes for the new year, so keep an eye out now for any zero joining fees or cut-price subscriptions that may be better than the deal you’re currently on.
4. Split your money into ‘pots’.
Henderson suggests creating spending pots to cover essentials such as weekly food shopping and rent or mortgage payments “and try to leave that money alone”.
He continues: “You can then start to divide up the rest of your money for other spending or savings, safe in the knowledge that you can meet your necessary outgoings.”
You could either divide money up using your bank’s app or keep separate bank accounts for different purposes.
5. Set goals.
Henderson says: “Spend some time thinking about the things you want to achieve in 2025.
“This might be on your own, but it could be with your partner or even with friends so make sure you involve them too. These don’t need to be big financial commitments.
“Achievable goals are more motivating – it might be adding a little extra to your savings at the start of each month, starting to save for your children’s future, managing your debt or building an emergency spending pot. Set yourself a target, work out how you will get there and make a head start if you can.”
6. Make your good intentions automatic.
“Once you have your budget and your financial goals set, think about setting up automatic transfers for after you get paid,” says Henderson.
“This will mean your money gets sorted without you even having to think about it and can be really useful if you are looking to build up your savings. These don’t have to be set in stone – you can tweak them each month to suit your budget.”
7. Try a savings challenge.
Saving what you can afford, no matter how much or how little, can be a great habit to form.
Henderson suggests trying a “family penny savings challenge”, by putting away 1p on day one of the new year, 2p the next day, 3p the day after and so on.
“After a year, this could add up to a total of £667.95,” he says.
8. Give yourself ‘cooling-off’ periods.
During the dark and cold winter evenings, it’s easy to spend more time sitting on the sofa scrolling through a mobile phone and perhaps buying items that are not really wanted or needed.
To make spending more mindful, Henderson suggests starting practising “cooling-off” periods from spending right now “so you know what works for you come the start of the year”.
9. Shop around for savings deals.
With two recent cuts in the Bank of England base rate, some savings accounts may not be as generous as they were, making the need to shop around for the top deals more pressing.
Adam Thrower, head of savings at Shawbrook, suggests considering whether you want to lock money into a fixed-rate deal, which can be useful in supporting longer-term goals such as getting on the property ladder, or whether your priority is an easy access account with the flexibility to withdraw cash for emergencies, or shorter-term needs such as holidays. Some savers may want a mix of deals to suit their goals.
Thrower says: “While it’s easy to stick with what you have, this could mean missing out on higher interest rates elsewhere.”
He also cautions that familiarity with “big names” can be a drawback when it comes to saving, so take time to compare what’s available across the market, including the challenger brands.
10. Be tax aware.
Finally, tax should be a key consideration, says Thrower.
The personal savings allowance (PSA) allows basic rate taxpayers to earn up to £1,000 tax-free annually on their savings. ISAs meanwhile, are ringfenced from tax, so some savers may want to weigh up whether they might be better off moving some of their money.
