For many across the UK, the festive season's cheer has given way to January's financial anxiety. Recognising this widespread strain, the charity Citizens Advice has issued a crucial guide to help individuals and families get their finances back on track after overspending during Christmas.
Step One: Face the figures with a clear budget
The cornerstone of recovery is a brutally honest budget. Citizens Advice stresses that you must first list all your monthly income against every single outgoing. This means accounting for everything from your rent or mortgage to your daily coffee. This process shines a light on exactly where your money is going, revealing immediate opportunities to cut back on non-essential spending.
Step Two: Know your priority debts
Not all debts are equal. The guide makes a critical distinction between 'priority' and 'non-priority' debts. Priority debts include rent, mortgage, council tax, and energy bills. Falling behind on these can lead to severe consequences like eviction, bailiff visits, or having your gas and electricity cut off. These must always be paid before tackling credit card or store card debts.
Step Three: Communicate and seek protection
If you know you will miss a payment, do not hide. Contact your creditor immediately. Many companies have hardship procedures and may agree to an affordable repayment plan if you approach them early. Furthermore, the guide highlights the government's 'Breathing Space' scheme. This offers legal protection from creditor action for up to 60 days, pausing interest and enforcement, giving you vital time to seek professional debt advice.
Maximising income and seeking expert help
Alongside managing outgoings, boosting your income is key. Check you are claiming all benefits you're entitled to and compare prices for utilities, insurance, and even your grocery shop. Switching to a cheaper supermarket or cancelling unused subscriptions can free up significant weekly cash.
Finally, if the situation feels overwhelming, seek free, confidential advice. Organisations like Citizens Advice can provide a personalised plan, help negotiate with lenders on your behalf, and ensure you access all available support. Taking that first step to ask for help is the most powerful move you can make towards financial recovery this new year.
