Money remains tight in many households, in the aftermath of the recent credit crunch. Many people find they have to default on payments and research a number of credit repair methods such as debt management, consolidation loans or even an IVA. So budgeting is, of course, extra important nowadays. But how do you set a budget? And how do you stick to it once you do?
Start off with a simple spreadsheet. Take down your monthly take-home pay and your monthly bills. Don’t kid yourself; be honest and make sure you don’t forget anything. This will make sure you can definitely meet all your needs or be clear on how much of a shortfall you have to deal with if you can’t.
If you’re behind on any payments, get back up to date. A big and important fact to remember here is that your creditors are not ogres or bogeymen; they want to help you pay them back because it will help them get the money they want and need. Don’t feel you should hide from them; this will only get you further into trouble. Keep all your files and make sure you answer your phone. Telling them when they will get their money will allow them to anticipate the future and work with you. It may even help you avoid some late fees!
Banks such as Think Bank and Royal Bank of Scotland can offer you bank accounts which are fee-free in terms of overdraft. You pay £14.50 per months, or thereabouts, and in return you needn’t worry about direct debits’ bouncing. You’ll be able to make sure you don’t incur costly charges by paying the monthly fee and keep your new account well away from your existing debts.
In your spreadsheet, make sure you list all the unavoidable payments. Remember to include every single minimum payment, or you’ll end up in a situation where you can’t make ends meet. Include rent or mortgage payments, and utility and council tax bills. You’ll also have to remember the occasional bill such as your car tax disc, so that these things can’t catch you out by surprise.
When you take all your unavoidable expenses out of your monthly take-home pay, you can start thinking about weekly budgets. Don’t cut back too much; you need to make sure you can afford your weekly shopping trip. Disposable income can either be saved or spent on bits and bats.
Sticking to your monthly budget is important, and will allow you to remain financially happy and healthy. Put some time into it, and you’ll soon find yourself more successful and able to put money aside for larger purchases and even down payments on a new home or vehicle.