With the ever-biting recession still in full force more and more people are struggling to meet the costs of day to day living. Salary freezes and short time working mean that most families are feeling the pinch and with the increased cost of living are struggling to meet credit card debts, loans or even to buy the weekly food shop due to such high overheads/outgoings.
Take Control of Your Finances
There’s no point in burying your head in the sand, the problem won’t go away. You have to take control of your finances and the first step is to know where you stand. Once you know where you are, you can plan where to go and what to do.
Create A Budget
If struggling with money the first thing to do is to create a budget and even if you’re not struggling a budget may show you ways to better use what money you have to get what you really want out of life
You need to figure out you monthly income – include salary, tax credits, child benefit and any other income sources such as part time jobs or savings interest.
Next you need to plot your monthly necessary and primary outgoings. These will be you mortgage/rent or any secured payment; household bills such as water, gas, electricity, home insurance and council tax; and if your car is necessary for work your car insurance payments. A good idea for household bills that come yearly, such as home insurance and car insurance, is to calculate how much they cost per month and put this aside into a savings account. It stops a huge bill derailing your budget later in the year.
Don’t forget with cars that they lose about a quarter of their value each year and on top of that you have to pay for services, repairs, MOT etc. If you can do without a car this budget may well convince you to look at alternatives such as electric powered bikes, mopeds & scooters and don’t forget you can get cheap train travel.
Food and Household Budget
The next thing to do is to work out how much you need each month to buy food and household basics such as cleaning products. Remember that shopping around a few supermarkets can save you money. Aldi, for example, has weekly offers on vegetables making them cheaper than other supermarkets. A local butchers may be cheaper than the supermarket for meat and a local market will likely sells vegetables at cheaper prices, especially if you go towards the end of the day when they need to get rid of stock.
Credit Cards and Loans
Before you can set anything aside for “extras”, e.g cinema, clubs/group payments, gym memberships, you need to make sure your non-secured debts are paid. If you have taken off your Primary Outgoings and your Food & House Budget and don’t have enough to meet all your credit card and loan repayments you will need to either enter into an agreement with your creditors to make reduced payments or possibly consider bankruptcy as an option. Please see our article on Reduced Payment Arrangements & Bankruptcy.
Budget Planning Websites
Some good sites to use to help you make a monthly budget:
To compare and reduce household energy bills check: Energy helpline
To check your entitlement for benefits including working tax credit and council tax benefit: Turn 2 Us
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