Six money mistakes people make in January and how to avoid them
January is a time for starting fresh, setting new goals, and making positive changes in our lives, however, it’s also a time when many people make common money mistakes that can significantly impact their financial stability for the rest of the year. From overspending in post-holiday sales to neglecting to plan for tax season, these errors can lead to financial strain and stress. With the New Year upon us, it’s the perfect opportunity to start setting financial goals and developing healthy financial habits for the long term.
Fred Harrington, CEO of Coupon Mister says there are several key steps that people can take to stay financially healthy in the coming year. He explained: “People’s financial self-control tends to dwindle in the New Year and their emotions may get the better of them. To avoid this, identify your money mistakes and use professional advice to develop a plan you can stick to.”
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Here are the top six money mistakes Fred sees in consumers plus a few tips on avoiding them and creating a solid financial foundation for 2025.
Ignoring credit card debt
With all the holiday expenses, it's common for credit card debt to pile up in January. Don't avoid facing your credit card statements. Fred suggests: “Prioritise paying off your debt and consider consolidating it into a lower-interest loan. Always make your minimum payment at the very least to protect your credit score”.
Not tracking your expenses
It's easy to lose track of your spending, especially after Christmas. Make it a habit to track your expenses and evaluate where your money is going. This will help you identify areas where you can cut back and save more.
Fred adds, “Many people create a budget at the beginning of the year but fail to review it regularly. Take a look at your budget and expenses to see where you can make adjustments and save more money.”
Overspending in post-holiday sales
It's easy to get carried away with all the great deals and discounts during post-holiday sales but beware of overspending and racking up credit card debt. Instead, stick to a budget and only purchase what you genuinely need.
Impulse buying
The sales and deals in January can be tempting, but don't let them lead you into making impulsive purchases. Instead, take the time to consider whether you genuinely need an item or if it's just a want.
Fred said: “Professional marketers are very savvy and know just what to say to relate to your situation and entice you to buy. Resist this urge unless it’s already planned for in your budget.”
Neglecting to plan for end of financial year
April 5 marks the end of the 2024/25 financial year and while it may seem like a few months away, it will be here before you know it. Don't make the mistake of waiting until the last minute to gather all your documents and file your taxes. Start organising your financial records now to avoid the stress and potential penalties.
Not taking advantage of employee benefits
A lot of companies offer fantastic employee benefits such as health discounts, but people often fail to take full advantage. Maximising these benefits to secure your financial future.
How to create a solid financial plan
Once you’re aware of the money traps most people fall into and have all the information, it’s time to create a financial plan. Use the tips below to get started.
Evaluate your current financial situation - Take time to review your income, expenses, debt, and savings. This will give you a starting point from which to work.
Make a budget - Create a budget that aligns with your goals and helps you prioritise your spending.
Cut unnecessary expenses - Look for areas where you can cut back on expenses and save more money.
Pay off debt - Make a plan to pay off your debt, starting with high-interest debt first.
Start an emergency fund - Set aside a portion of your income to build an emergency fund for unexpected expenses.
Invest for the future - Consider investing in a retirement account or other investment opportunities to build long-term wealth.
Seek professional advice - A financial advisor can help you create a personalised plan and provide guidance throughout the year.
Fred added: “By avoiding these common money mistakes and following these tips, you can start the new year on the right foot and work towards achieving your financial goals. Remember, financial stability takes time and effort, so be patient with yourself and stay disciplined.
“By following these steps and practising healthy financial habits, individuals can stay financially stable and secure in the coming years. It may take diligence and discipline, but with a solid plan, you can set yourself and your family up for a financially healthy 2025 and beyond.”
