Finance

Financial Burden

Struggling with the financial burden of Christmas and losing sleep over it? Paul Day, a financial wellbeing expert at the charity Caba, has shared invaluable tips for accountants grappling with debt, offering a pathway to end the year on a positive note.

Just how heavy is the financial burden of Christmas?

December poses budgeting challenges for many, especially with the average UK household expected to spend between £700 and £973 per head during Christmas 2023. Remarkably, financial stress affects accountants too; according to caba research, about 42% of accountants and ACA students face financial difficulties amid the ongoing cost-of-living crisis. Of this group, 59% report feeling stressed, with a third admitting to experiencing depression.

Interestingly, the research also reveals that accountants often hesitate to discuss their financial concerns, driven by the belief that they should be adept at managing their own finances. There’s a prevailing sense of being alone in dealing with such significant issues, preventing them from seeking support.

The crucial reminder here is that no one is alone in this struggle; help is always available. Taking control of personal finances is achievable through various strategies.

Distinguishing between good and bad debt is a fundamental step. While credit and borrowing are essential for a functioning economy, accumulating excessive or unsustainable debt is considered ‘bad.’ For instance, borrowing to cover basic living expenses or running up a credit card bill without a clear repayment plan may indicate problematic debt. However, the distinction between ‘good’ and ‘bad’ debt is subjective and dependent on individual financial journeys—debt should work for you, not burden you.

Budgeting emerges as a powerful tool for escaping debt. Consistently tracking expenses through money management apps or spreadsheets detailing income sources and outgoing expenses provides a clearer understanding of expenditures. This practice reveals areas where money can be redirected towards debt reduction, highlighting trends and potential cutbacks. Developing a budget helps create a financial plan, and seeking assistance from a financial wellbeing expert can further refine your position.

Managing finances with debt may seem overwhelming, but having a plan makes it more manageable. The key is not to have all the answers yourself—plenty of useful guidance and experts are available to assist; taking the first step is crucial.

Sharing your problems can alleviate the burden, and seeking support from an expert or a trusted individual can help explore options. Caba offers support through self-help guides, including a free debt toolkit, along with mental health support and debt advice for accountants members and ACA students.

Quick tips for navigating debt include honesty about your situation, seeking help, prioritising debt repayment over savings, avoiding comparisons with others, taking your debt seriously, and prioritising mental health.

Remember, your mental health is more important than any financial obligation. Paul Day, an expert debt adviser at Caba, emphasises this as part of the occupational charity’s commitment to helping the ICAEW community thrive in both personal and professional aspects.

For those facing debt, additional information, guidance, and free tools can be found on Caba’s personal finance hub. Or speak to us directly.