How to recover from the spend-fest season
5 min | 19 December 2022
It arrives every year, just after Christmas: the month of reckoning called January. Here’s how to save in the New Year.
Did you spend too much at Christmas? Have you made a long list of New Year’s resolutions? Are you economising? Are you doing Dry January? Are you exercising? It’s bad enough that we’re now in the bleak midwinter. But we must give up alcohol, go to the gym and save money as well? Please, no.
Yet it is a good idea to break patterns and make new habits at the beginning of the year. And there’s one habit that could be more important to establish than all the others. Most of us, whether or not we succeeded in economising in December, will need to save money in January.
There’s much argument about how long it takes to break a habit, but behavioural psychology author James Clear (Opens in new window) points out that the best way is to replace old habits with new ones. ‘You don’t eliminate a bad habit, you replace it,’ he says, and he recommends choosing a substitute for your bad habit, rather than simply deciding not to do it anymore. Do you have a spending habit? Here are some new habits to replace that.
Here’s how to help to succeed at saving in January – and set yourself up for a good year financially.
Draw up a budget
Start by downloading your latest statements for your bank accounts and your credit cards, if you have them. Make a note of your regular outgoings, your direct debits or standing orders. Calculate how much you spend in categories – accommodation, transport, food, clothing, entertainment. Divide those into essential and non-essential costs – and use the cost of essentials to estimate how much you can save.
Pay yourself first
Use piggy-banking, where you siphon money off into separate savings pots when your salary arrives, then give it a purpose – like holidays, bigger purchases, or emergencies. Did you give up something for January? Consider saving that, too. It will feel good.
Save on the sales
'The more you spend the more you save' idea isn't exactly true: you didn't save 50%, you spent 50%. It’s good to remember this, whether the sales are in January or July. And prices may not genuinely be lower. Research from consumer champion Which? (Opens in new window) showed the majority of items from the Black Friday sales were cheaper up to six months before or after. So don’t shop – stop.
If you genuinely want a specific item, be savvy. Compare costs and quality, and fill some baskets online before going to the checkout. Pricerunner (Opens in new window) and PriceSpy (Opens in new window) can help you see what is cheapest and where.
Save on clothes
Do a stocktake of your wardrobe. You'll find lovely clothes you may have forgotten about. Have fun by putting some new outfits together.
Fill a bag to take to the charity shop, and when you do, have a scout around for any high-end, branded bargains at other charity and vintage shops nearby.
Enjoy the fact that it’s for a good cause. Just don’t do what my friend did: she bought a smart suit that her mother-in-law-to-be had donated to a charity shop, then turned up wearing it for the all-important ‘Meet the Parents’ lunch.
Have a clothes swap at home with your friends if you are socialising again, or at work with your colleagues if you are back in the office. I did this at a previous job and still wear some great items I was given.
Save on food
Don’t eat out – eat at home. Cook large, and freeze meal-size portions. If you’re socialising again, have friends over for low-key, kitchen suppers.
Trim your shopping list. Choose cheaper meat cuts (great for slow-cooking), imperfect vegetables (they taste the same!) and fewer ready-made meals (likely to have a higher cost, higher additive-count).
Shop online. It may well be worth the delivery charge (but check out click and collect as it's usually cheaper) as the clever layout of the supermarket leads you past the luxuries to the essentials and adding the cost of those impulse buys is likely to ensure you spend more.
If you shop online, you can ensure you're buying what you actually need by sticking to a list. You can often find low-cost items more easily without being tempted by the strategically placed 'offers' in-store. It's simple to remove items from your basket to trim the total, and you will find your favourite items saved in convenient lists. It can also take less time, and time is money, right?
Don’t be too ambitious with your New Year’s resolutions. According to research in the US, approximately 80% of New Year’s resolutions fail.
Rather choose just one new habit and stick to it: save money. And start with January.