Top Tips for Budgeting

1. Keep an accurate note of how much you spend for one full month. That includes newspapers and magazines, lunches, cups of coffee and drinks in the pub. Only by doing this will you be able to calculate how much your day to day living is costing you.

1. Try to pay as many bills as you can by direct debit every month. Apart from the fact that you might get a discount for paying this way, if you arrange for bills to be dealt with as soon after your salary is paid as possible then you will know how much money you have left for the rest of the month

1. Keep a spreadsheet showing your monthly income and expenditure. Spread as many bills as you can over the year so that you don’t have big bulges in some months when your expenses increase dramatically. Don’t forget to add in the things that you only pay once a year like your TV License or your Car Insurance.

1. If you need to overdraw to cope with extra expenditure at a particular time remember to ask your Bank first. Unauthorised overdraft rates are much higher than authorised ones and you also run the risk of having bills unpaid or direct debits returned, increasing the charges you are likely to have to pay to your bank.

1. If your borrowing requirements are likely to be longer term then a personal loan might be a better option than an overdraft. Shop around before settling on the loan that offers not only the lowest interest rate but also flexible terms should you find that you are able to repay the debt earlier than you originally intended.

1. Don’t rush into buying something just because you want it today. A store might offer you access to a personal loan or its’ own store card but you should go away and check out the price elsewhere, and whether there are better ways of funding your purchase. This is especially true of more expensive items like furniture or cars.

1. If things get tight at anytime remember that you have to prioritise your debts. If you don’t pay your mortgage you could lose your house, if your electricity remains unpaid you may have it cut off. If you can’t afford to pay everything at one time then you need to make a list of the most important debts.

1. Make sure you speak to your creditors if you are not going to pay bills. There is nothing they like less than debt being built up without being informed. It’s not easy but there should be no stigma to owing money and it is really important that you are up front and honest. Go to them and tell them you have a problem, why you have it, and make a proposal to pay what you can when you can.

1. Remember that if your outgoings exceed your incomings you do have a choice. Most people would look at ways to lower outgoings by trying to spend less. But you could, instead, look at ways of increasing your income, whether by looking for a better rate of interest on savings income or asking for a salary increase or more overtime at work.

1. Here’s the most important tip. A budget is not all about telling you to stop spending money. It’s not supposed to be negative. Just the opposite in fact. It’s all about helping you to spend more money effectively and in areas that you want to spend it, rather than wasting it on high interest charges on loans and credit cards and bank charges. Use it as a positive toll to help you control your money rather than allowing your money to control you!