January is a very long month. Many people get paid early in December and this means a longer wait than usual for your next pay packet, at a time of year when you need it most. The result can be panic as we cut back on spending and leap into loans to consolidate our debts. But there are lots of ways to be sensible with your cash while enjoying a few well-earned treats.
Spiritual spending
Stressed-out women have kick-started a new credit card trend called 'spiritual spending' and splashed out £670 million over the last year on spa days, shiatsu, massages and manicures, according to a study for Virgin Money.
Three quarters of the women surveyed told the researchers that they are increasingly turning to alternative health therapies and yoga retreats to help them deal with stress. One in five women admit to spending an average of £250 per year – usually on their credit card - to pamper themselves with health and beauty products and treatments like facials or manicures and massages.
Erica Bell of Virgin Money, says, 'Everyone needs to treat themselves now and again and, used in the right way, a credit card can be useful in managing your money and smoothing monthly expenditure. After all, well-managed finances are the best way to keep stress levels in check.'
Financial resolutions
So, how can you find some cash to spend spiritually? For starters, making changes in your lifestyle as part of a new year's resolution could also save you money. Research from the One account shows that smoking is the number one vice to give up in 2004, with one in five of the UK's 12 million smokers planning to kick the habit. As well as the health benefits, they will save an average of £109 per month.
Chocolate comes a close second, with 17% of adults planning to beat their addiction and save an average of £22.84 per month. Giving up takeaways and junk food will save an average of £50.87 per month. That would buy a lot of bubble bath.
The One account's James Duffell explains: 'The cash accumulated by quitting a vice soon adds up over the year into a nice lump sum that can be put aside for a special treat like a holiday or paid straight into your mortgage.'
You shall go to the spa
If you cannot face life without chocolate, cigarettes or Pinot Grigio, there are other ways to balance your budget. After all, vice queens need pampering too.
The chances are that your spending spiralled in the run up to Christmas, so now is a good time to consolidate your debts. Pay off your credit and store card debts as soon as possible. Most credit cards charge around 17% per annum and store cards charge even more, sometimes as much as 29%. That means that if you owe £500 on each, you will be paying around £20 per month in interest alone.
Pay off as much as you can on the card with the highest interest, while maintaining minimum payments on the other. And take advantage of the one of the dozens of 0% balance transfer offers around. But don't forget, clearing the balance from a card is not an excuse to start using it again. Cut up the old card when the new one comes through and resist the temptation to sign up for additional, expensive store cards.
Direct change
Reviewing your direct debits and standing orders is good financial practice, but it may also throw up things you had forgotten you were paying for. Research from cahoot reveals that, as a nation, we waste an amazing £160 million every year on direct debits we forget to cancel.
More than 80% of people continue paying for two or more months for a gym membership they no longer use. Women are quicker to cancel their gym membership than men - 19% of women cancel within the first month they stop using it compared to only 10% of men. Magazine subscriptions and mobile phone contracts are other items that go unnoticed.
'Direct debits are a very convenient way of paying for regular subscriptions, but this research demonstrates how people need to take control of their finances if they are to be used effectively,' says Deborah Cutler of cahoot. 'It's important to cancel the direct debit, or you could potentially find yourself hundreds of pounds out of pocket,' she adds.
Ask your bank for a list of your direct debits and standing orders and make sure you review them regularly.
Up for grabs
Finally, make sure you are not sitting on a fortune. If you bought something before Christmas and did not wear or use it, then make sure you take it back for a refund as soon as possible. The same goes for any unwanted Christmas presents. This is where having a receipt comes in handy, so that the store can refund you the price that was originally paid, rather than a reduced price if the item is now in the sale.
Spring-clean your home and make money by selling anything your don't want on an auction site, such as ebay. You don't have to go as far as American John Freyer, who sold the entire contents of his house, made thousands of dollars and wrote a book about it, but people do seem to want to buy just about anything.
