Today has been dubbed Blue Monday – the most depressing day of the year – and considering how many people could be battling with their finances this month, it's little wonder. After all, research shows that not only are people struggling to make ends meet after overspending at Christmas, but that loan requests are rising as a result.
Figures from Lloyds Bank show that consumers spent an average of £465 each on Christmas 2016, with most not making an overall budget. This could explain why 11% spent over £1,000 on the festivities – a proportion which rises to 17% among households with children – with planning ahead felt to be a significant challenge for some.
Indeed, 54% of respondents didn't budget at all or only budgeted for part of their spending, with just 22% setting a budget and sticking to it. However, even good intentions don't always work out, with 12% admitting that they set a budget but didn't stick to it. This means they ended up spending more than the overall average, with those who didn't make a budget seeing their spend rise by 5% compared with Christmas 2015 to £474.
However, it's how they paid for this year's festivities that could be adding to the challenges faced this month. While 26% managed to save in advance, 22% turned to a credit card and 6% used their overdraft, both of which could mean they'll be facing some hefty bills this month.
Those who were paid earlier in December could find it even tougher to make ends meet – 33% of those who face a bigger gap between their December and January paydays admit their finances are more difficult to manage, yet just 42% planned for it.
"Make no mistake, the cost of Christmas can be hefty, but as a nation we don't do much to make it easier on ourselves," said Jon Roberts of Lloyds Bank. "Our research shows that we fail to budget properly, which leads to unexpected overspending, and we don't plan for a longer gap between pay cheques in December and January either, both of which can make managing our money trickier in the New Year."
It's little wonder, then, that so many are forced to turn to credit to make it through to the end of the month, as additional research from The Money Platform shows.
The data shows that short-term loan requests increased by 50% in the first week of January when compared with the first week of December, with 36% needing money for a household emergency (such as frozen pipes or a faulty boiler), highlighting that many have little left in the kitty after the Christmas blowout.
This is compounded by the fact that 49% of respondents regularly exceed their monthly budget, and as a result, one in three regularly rely on credit cards and overdrafts to make ends meet. Not only that, but 26% of those in full-time employment have no money put aside in case of an unexpected expenditure, making the rise in loan requests even less surprising.
"The middle of January can be a struggle for anyone, but particularly after the expense of Christmas and New Year," said Charles Balcombe of The Money Platform. "The purchase of expensive gym memberships and the start of holiday booking season also takes its financial toll. Blue Monday, as it has become known, finds a huge number of Brits out of pocket and in need of a financial boost."
Are you one of the many who would welcome some financial input? Make sure you go about it the right way! You may want to consider applying for a personal loan if you've got several credit debts to repay and want a quick and easy route to consolidation (rates are at record lows, too, so now could be a great time to get in on the action).
Alternatively, opting for a 0% balance transfer credit card could be ideal if you've got smaller credit card debts and want to repay them without interest adding to your struggles. You could even look for those that come with a 0% money transfer term if you need to repay an overdraft, giving you an interest-free cash injection that can be put to excellent use (incidentally, if you do regularly dip into the red, it may be worth switching to a current account that comes with low overdraft fees).
However you go about making ends meet, make sure your credit score is up to scratch, and make absolutely certain you're organised and can keep up with repayments. That way, you can get your finances back on track for the year ahead.
Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.
Moneyfacts.co.uk will, like most other websites, place cookies onto your computer’s
hard drive. This includes tracking cookies.