Getting your finances in order
Monday morning blues are hard enough to shake off as it is, so naturally, waking up to the sobering fact that you have overspent on the weekend is enough to break to strongest of spenders.
Living in fear of checking your bank balance is no way to live, take the time to evaluate your outgoings and get to know your spending habits.
We are now just out the season of serious spending and it is important, now more than ever, to get your finances in order. Read our helpful tips below to help you to manage your money.
The first step is to create a budget; this will help you keep track of exactly where your money is going each month.
Over half of UK households regularly use a budget and say it gives them peace of mind for the month ahead.
A budget works by calculating your monthly income (if your wages often fluctuate then calculate an average over your last 4 months), taking away all of your outgoings (council tax, rent, utility bills etc) and the amount you are left with is called your disposable income (DI).
There are many ways to create your budget, for instance if you are savvy with Microsoft Excel then you can create a spreadsheet and use the formula ‘Income – Expenditure (outgoings) = Disposable Income’. Or you can simply write it down and work it out manually. Our useful debt calculator is quick and easy to use.
When taking into consideration your expenditure items, you must ensure you create a budget for all areas of your spending. This could include items such as;
- Household Bills like rent, council tax, insurances, energy etc.
- Living costs for example food and housekeeping, clothing and footwear etc.
- Travel costs i.e fuel, insurance, tax, public transport
- Leisure and hobbies for example gym membership, sports club, social clubs
If you find your expenses are more than your income is, then it’s time to look at ways you can cut back on some of your outgoings. For example, do you have a gym membership you don’t use? Could you get a better deal on your energy bills? Or maybe you spend a little too much in certain areas like food/going out. Comparison websites such as www.moneysavingexpert.co.uk are a great tool to use to see if you could be saving money each month.
Once your budget is complete, keep a note of what you are spending each month so you can refer back to it when updating your future budget planner.
Unfortunately, life doesn’t always run as smoothly as one would hope and there is no guarantee that things won’t change from month to month. To keep on top of your spending, we advise you to regularly review your planner, perhaps at the end of each month – ready for the next one.
None of us know what life is going to throw at us from one day to the next, if possible build an emergency fund you can fall back on in case the worst should happen and you have a period of unemployment or an emergency home or car repair to pay for.
Generally it is advisable to save three months’ worth of your household and living expenses, however this isn’t possible for everyone so start off small and let it build up. It is important to remember not to attempt to save so much that you struggle to get through the month. Saving just £3 per day adds up to £1,091 over a year!
Once you have decided how much you want to save each week or month, open a savings account and set up a standing order to make your regular payments (do this on or just after your income falls into your bank account).
Once you have your emergency fund you can start saving for something rewarding like a holiday!
Debt payments eating into your living money
Our debt calculator helps you work out how much your debt is costing you and whether this is affordable. If you debt payments seriously exceed the surplus that is left each month after deducting your household and personal expenses, then you have a debt problem.
Dealing with Debt Problems
There are a variety of ways to deal with problem debt and the option very much depend on your circumstances. These could include:-
- Refinancing either through secured or unsecured loans or remortgaging
- Debt Management plans – as long as the term to clear your debt is reasonable
- Individual Voluntary Arrangements – aimed at higher levels of debts. Generally payments plans over 5 to 6 years but they can also be full and final style arrangements to settle your debts by a lump sum.
- Debt Relief Orders
If you find you need some help with budgeting or are worrying about debt, get in touch. There a range of solutions depending on whether you are salaried or self employed or you are a director or shareholder of a limited company. Should you enter into a debt solution with us, fees will apply. If you would like our team to call you, please use our contact form.
All debt solutions need to be carefully considered. IVA’s are formal solutions and failure to keep to the terms can result in your IVA failing and you could end up bankrupt.
There is also free debt help and advice available through a variety of debt charities. For more information, we recommend you visit www.moneyadviceservice.org.uk.
The Debt Advisor is Authorised and regulated by The Financial Conduct Authority (reg no: 606669).
Debt Solution Options
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Specialist advisors are available who can advise you on the most appropiate solution to bring you relief from debt