Top tips to help keep the Blue Monday at bay and sort your life for years to come
The day earned its grim reputation because not only are many of us fed up about being a little fatter after Christmas, a fair few are struggling to give booze a break, for some it’s proving tougher than they thought to go vegan for a month, while millions will be upset about having already broken their New Year resolutions.
And crucially from Monday, the Christmas credit card bills start dropping through our letterboxes, so we are feeling the pinch after playing Santa Claus last month.
Alnwick-based Alister Gaines, founder of Akrivis Wealth, a financial management company that looks after the money of some of the North East’s most-well heeled individuals, admits he can’t help anyone shed a few pounds, or stay away from their favourite pub or butcher’s shop, but reckons it is relatively easy to at least get your finances into shape for 2020.
“Losing weight, going vegan, exercising more or taking up a new hobby for 2020 are all well and good, but if your finances are in a mess then really you’ve got to make sorting that your number one priority for the New Year in my view,” said Alister.
“Take a look at your spending habits and make a plan based on what you need every month, what you might want to buy every month and what you can afford to save.
“The ‘needs’ are your fixed bills for necessities like mortgage or rent, heating and running a car. Your ‘wants’ are things like paying for a holiday or going for a meal out and obviously ‘savings’ are what you can put away for a rainy day.
“The best mix is spend half what you earn on ‘needs’, 30% on your ‘wants’ and then use 20% on ‘savings’.
“Taking ten minutes to check your regular bills for everything from home insurance to broadband can also pay big dividends.
“So many of these companies we all need sneak in a ‘loyalty penalty’, taking advantage of our reluctance to shop around by increasing the amount we pay when the yearly renewal notices land on our doorsteps. So look on a price comparison website, I guarantee yo’ll be pleasantly surprised at how much cash you will save.
“Then paying off any debts - even your mortgage - as fast as you can pays huge dividends.
“If you’ve got a £3,000 credit card debt at a typical 17% APR and are paying £100 off a month, it is going to take three years and three months to clear that card and you’ll pay £842 just in interest. If you pay £150 a month off you’ll save £300 in interest and have repaid the total more than a year earlier.
“If your mortgage is £125,000 and you pay back £500 a month over 25 years try to increase your payments by an extra £100. You’ll save £5,000 in interest and be mortgage free five years early.
“And if you are already able to save something each month, think about saving even more. Putting £100 away each month for 10 years at a realistic 5% interest rate will give you a £15,528 final sum, but setting aside just £30 more every pay day will turn that into £19,410.
“Finally, don’t put off pension planning. A basic rate taxpayer who puts £4,000 a year away for their retirement from the age of 35 could typically expect to have built up a pot of £354,000 by the time they are 65, but if they had started their pension aged 25 that figure soars to a whopping £640,000.”
Alister admits that thinking about money is not everyone’s cup of tea, however depressed we feel next Monday.
“I’ve given up booze for the month and my wife’s got me on a diet where I have to eat spinach for breakfast, nobody needs to tell me about Blue Monday, I’m well fed up,” he said.
“But I’d appeal to everyone to take a bit of time to think about their finances at this time of year, it’s one aspect of your life where you can take control and cheer yourself up.”