5 practical ways to cheer up your finances on Blue Monday

In 2004 a psychologist named Cliff Arnall coined the expression “Blue Monday.”

He reasoned that, due to a conflation of bad weather, limited daylight, and post-Christmas debt, the third Monday of January was the most depressing day of the year.

He has since confessed that the claim, that he made for a travel agency, had no foundation in fact, but the name has stuck.

There is general acceptance that getting through January can be challenging, especially if your finances did take a bit of a battering over the Christmas and new year period.

This year Blue Monday falls on 17 January. Although you may think that the concept is nonsense, it could well be a good day to actively take steps to make yourself some money, or to give yourself a mental boost by sorting out some financial issues.

Here are five suggestions for cheering up your finances on Blue Monday.

1. Complete your self-assessment tax return

If you submit your self-assessment tax return online, the deadline for doing this is midnight on 31 January.

If you need to complete a return you should have received written notification from HMRC. It’s worth checking on the HMRC website if you’re unsure.

On Blue Monday you’ll have a fortnight left before the deadline, so give yourself a lift by grasping the nettle and starting to get it done. You may need to obtain copies of some of your financial records to complete your return, so starting it now will give you time to do so.

HMRC have improved the online submission process over the last few years. It’s now much simpler to complete your return, so it shouldn’t be as daunting as you might think.

You may also make some money from it. For example, if you normally work in an office but have been working at home during the pandemic you may well be able to claim a tax rebate of £125.

2. Claim your higher or additional-rate pension tax relief

When you complete and submit your self-assessment tax return you may also be able to claim extra pension tax relief.

You generally benefit from basic-rate tax relief every time you make a pension contribution. But if you’re a higher- or additional-rate taxpayer, you will need to claim any further relief due to you through your tax return.

Recent research published in the Telegraph revealed that 8 out of 10 higher-rate taxpayers eligible to claim this relief fail to do so, missing out on an estimated £810 million every year.

If you haven’t previously completed a self-assessment tax return but have made pension contributions and paid tax at either the higher or additional rate, you may also be able to claim relief in arrears.

You can backdate claims for up to four previous tax years, which could give you a substantial financial boost.

3. Review your financial outgoings

Monday is normally the quietest evening of the week, so why not use the evening of Blue Monday to review your financial outgoings? As well as keeping track of your finances, you may also discover that you can save money, or even that you’re owed it.

Go through your latest bank statement and note down all your regular outgoings. Then check that the correct amount is being debited, and that you don’t have any money being taken that shouldn’t be.

It’s possible that you may have cancelled a particular contract, but money has still been collected, or you’ve paid a higher amount than you expected through a direct debit mandate.

Also check to see if there are any regular outgoings you can cancel.

Then, allocate what you’ve saved to either reducing your debt or to give your savings and investments a boost.

4. Consider switching your bank account

It’s likely that, at some stage, you’ve saved money by switching things like your car and household insurance. You could be one of the many people who save hundreds of pounds each year in this way.

Another way of potentially both saving money and making it is by moving your current account from one provider to another.

Many banks offer a cash bonus of as much as £150 for you to switch, and they will also take care of all the administration involved with changing direct debit details.

If you and your spouse or partner bank separately, you could potentially celebrate Blue Monday 2022 by earning up to £300 between you!

Before you go ahead, however, you should ensure that you don’t end up paying higher bank charges and that the facilities offered by any new account meet your personal banking needs.

5. Review your investments

Constantly checking the value of your pension fund and other investments normally isn’t advisable. It’s far too easy to overreact to sudden market fluctuations and make short-term decisions that don’t lend themselves to long-term performance.

However, if you haven’t reviewed them for some time, Blue Monday could well be the time to do so.

For one thing, in spite of the pandemic, markets around the world performed relatively well in 2021 so you may be pleasantly surprised. For example, the Dow Jones index rose by an impressive 18% in 2021 and the FTSE 100 was up 14.3% in the year.

Secondly, it’s worth checking through your portfolio and getting up-to-date valuations to ensure that it is still performing in line with your expectations and that it’s suitable for what you’re trying to achieve.

Get in touch

If you need help or guidance when you’re managing your personal finances, we’ll be happy to help you.

You can email us at enquiries@blackswanfp.co.uk or contact your adviser on 020 3828 8100.