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How to avoid a New Year debt hangover

Enjoying the Christmas break is important, but overindulging can leave you short when January arrives.

From planning your spending to staying on top of repayments, managing your money effectively can help make sure you have a great Christmas without ruining your start to 2021. 

1. Plan a budget

Creating a Christmas budget, which outlines all your costs and your incoming money, can help you get a clear idea of your cash flow. You’ll be able to see what you’re able to spare after your bills, rent and any other necessities are paid.

You may also be able to find areas where you can cut back on your spending.

Explore more: How to create a Christmas budget

2. Stick to your budget

Planning a budget is only useful if you stick to it. Holding on to any receipts, alongside checking your bank or credit card statements and noting down what you’ve spent, can help you stay on top of your money. Try reviewing your budget once or twice a week over the Christmas period to help you keep track.

Avoid buying little extras if they’re not accounted for in your budget. It may seem harmless, but small costs can add up and end up taking a chunk of money from your budget.

3. Stay on top of your bills and repayments

Falling behind on your bills, rent or other payments can be harder to catch up on and you may also be charged for late or missed payments. So making these outgoings a priority is important. You could try putting your bills and rent/mortgage money aside until your payments are due so you don’t accidentally use the money.

If you bank with HSBC and have an iPhone or iPad, you could use our Balance After Bills feature

It’s part of the HSBC UK Mobile Banking app, so you’ll need to download the app to your mobile device to use it. You’ll also need to register for mobile and online banking.

Balance After Bills estimates what you'll owe for the month ahead, based on your regular bills. It then shows you how much you could have left, once scheduled bills (standing orders and Direct Debits) are paid.

Explore more: Managing your money: 9 steps to financial wellbeing

4. Save where you can

Saving money at Christmas may seem difficult, but putting aside anything you can may help cover costs next year.

You could try rounding up your spending to the nearest pound and adding that to a savings account. Or, you could add money to your savings account once you’ve been paid. Separating the money you want to save from your main account can help prevent the temptation to spend it.

Saving little and often can soon add up. And by continually doing this you can turn it into a habit, which should help your savings continually grow.

Explore more: How to save money

5. Set financial goals for 2021

Christmas can be the ideal time to set yourself financial goals for the coming year. Think about what you want to achieve and how you can achieve it. It could be something as simple as saving a little more each month, or getting on top of any existing debts you may have.

You could even set mini-targets throughout the year, where you review your progress or re-evaluate your goals. Find out more about:

6. Ask for help

If you’re struggling to get back on track with your finances after Christmas, ask for help. You can speak to a family member or friend for advice, or even speak with your bank about steps you can take to get your finances in order.

Dealing with any debts early may help them become more manageable and reduce stress.

Explore more: How to repay debt

What next?

Planning for Christmas and spending your income wisely can help stay on top of your finances and avoid a New Year debt hangover. 

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