The financial tipping point of January

As we step into February, it’s worth reflecting on the hurdles that often make the month of January feel like an uphill journey. January has always been a notoriously difficult financial month, as the remnants of Christmas and the need to please people lingers among many families. Those on low incomes will try hard to reign in their expenses, but the truth is that many have already reached a breaking point and the financial recovery from 2023 feels like a long and impossible road. Pressure to purchase presents, cards, attend events, to feed more family members and the hike in supermarket prices and strategic ‘offers’ all play a major factor in understanding why December is considered such a difficult month. The cost-of-living crisis may have slipped out of the headlines, but it is certainly not over, and the fight to recover is hard. Research supports this theory, as a report published by the Joseph Rowntree foundation in January 2024 discovers 6 million people living in deep poverty would need to more than double their incomes to move out of poverty. Even those in full time employment suffered during the festive period, as Precious D (Changing Realities participant) explains:

“I am a single mother of 5.. I work full time..(during Christmas) I worry about the cost of living and bills, to allow myself to rest mentally, I have to compartmentalise and push things to the back of my mind, otherwise I can’t relax”. (Precious D)

Unfortunately, it is almost impossible as a parent to really escape the pressures of Christmas, because it really is ‘all around us’ as Bessie J, (Changing Realities participant) explains:

“The hype of Christmas begins on November 1st, and builds on TV, radio and online media, buy, buy, buy.. It’s difficult to get away from…” (Bessie J)

In addition to this, the UK building society Nationwide recently interviewed 2,000 customers, and of those surveyed, 84% felt that this January 2024 would be the ‘toughest year yet’. Further research concluded that 51% of people felt this was because of the recovery from Christmas spending, and 43% blamed increasing energy prices. The firm itself has opened a dedicated phone line to support people who may be concerned about their finances which is much needed, but we need to address the root cause as to why so many people are finding themselves in severe hardship. The social pressure to spend needs to cease, as the spirit of Christmas is about togetherness and not additional expenses. This discussion needs to be public so we can change people’s attitude towards what Christmas means to people. We also need to reduce people’s day to day living expenses by decreasing gas and food prices, so that people do not find themselves in a deep hole which is hard to escape from.

As Martin Lewis said in a recent television appearance, “Sometimes the greatest gift you can give someone, is nothing at all”.

As the start of a new month is now upon us, JRF reflects on what we need for this year to tell a different story for struggling families. The recovery process from a Christmas financial burnout is hard, and we need the government to promise to introduce a social tariff for energy customers and to keep the Energy Price Guarantee at £2,500. If this promise comes to fruition, families will at least know that even if people have a small budget for Christmas this year, their basics (food, energy and bills) will still be covered by Universal Credit. This basic dignity is the very best type of gift the government can give in hard times.