Most of us need to take on debt at some point or another in our lives – whether it’s a mortgage or borrowing a tenner from a friend until the end of the week – but the less debt you can take on, the less risk you’ll have.

A good way of reducing your risk of getting into debt is by putting together a budget plan.

How to create a budget plan

1. Start by taking your last few bank statements (the last three to six months should be fine) and noting down your regular expenses. This will include things like mortgage/rent payments, energy bills, council tax and groceries. For anything that varies, such as food costs, put down a generous estimate of your typical spend.

Now add up the total – this is your total monthly spend.

2. Now take note of your typical monthly income. If your income varies, make a conservative estimate (i.e. the minimum you think you’re likely to receive). This can help you keep from overspending, and you’ll know that any extra income you receive can still be spent safely, without putting your essential bills at risk.

3. Subtract your total monthly spend from your typical monthly income. What’s left is your spare income, which you can use as you wish.

It really is that simple. If you want to go a bit more advanced, however, you could set up a savings account in which you keep all your money until it’s needed. This can help to increase the amount of interest you earn over time, and it could reduce the temptation to indulge in impulse purchases.

However, if you’re going to do this, you might want to make sure you have an authorised overdraft facility in place just in case any unexpected costs come up. This can help you cope with those costs, leaving you free to focus on clearing your overdraft as soon as possible.

What if I’m still struggling to stay out of debt?

Sometimes people struggle with their finances even if they do try to keep to a strict budget. This can be for a number of reasons: perhaps a few unexpected costs came up that they simply couldn’t afford, or maybe a change in their circumstances means they can no longer afford their outgoings. Whatever the case, if you’re struggling, get advice from an expert as soon as you can.

If you’re already in debt and you’re struggling to pay it back, don’t hesitate to talk to a debt adviser or a debt management company about possible solutions. For example, if you’re really struggling, a debt management plan could help you to reduce your unsecured debt repayments and make them affordable again. Repaying your debts more slowly can damage your credit rating and cost you more in the long run, but this may be unavoidable if you genuinely can’t afford your monthly repayments.

If you are tired of having no money, even just after you have just been paid, then it might be time for you to introduce a budget into your lifestyle. There is software that you can make use of to help you implicate this, but you will have to do some research and decide what the best personal finance software is for you to use for your situation. So what is the definition of personal finance you ask? Financial decisions as well as activities you make, including things like savings, insurance, budgeting, mortgages and just analyzing your financial situation and what you can do about it. This is where personal finance and budgeting comes to your rescue.

There are a few budget systems that you should look into, some of which include a credit card budget, shopping budget, household budget and vehicle insurance budget. Also, you have to look into making important lifestyle changes and getting your mortgage payment down. Once you have sorted out budgets for all of the above mentioned items, you need to take a close look at your lifestyle. First of all, do you have a gym membership that you pay monthly? If so, how often do you use it? If it’s less than twice a week, cancel your member and do some exercise at home if you must.

Planning for your near future can start any time, so if you want to start saving now, it is not too late. There are programs online that offer worksheets for you to make use of when you are busy with your personal finance budgeting. These worksheets really help the situation and make the task easier, making it more enjoyable to do what you keep putting off. Even if it is a time consuming task, it is something that has to be done so whether you do it now or in a month’s time, rather get it over and done with so you can save money, live better and begin your new budgeted life.

The next thing you have to tackle would be your credit card. If you have one, which you probably do, you need to get rid of the debt on it. For the next few months, pay double your installment if possible, just to get it out the way. Once you have fully paid off the card, cut it up into small pieces and toss it, you do not need a credit card! Credit card debt is depressing, and the worst thing about it is that you are always tempted to use it because whatever you are buying you don’t have to pay for now and this is what makes a credit card so dangerous and unnecessary.

Personal finance and budgeting isn’t that difficult to get your head around, especially if you have some help from one of the many programs available online. You will have it cracked in no time and once it is properly in place you will love the idea.

Original

Studies continually show that women and men behave differently about money, whether they’re in debt or not. This has been exacerbated by the current economic situation: fresh rounds of cuts and fears that Britain is hurtling towards a double-dip recession mean plenty of couples are feeling the strain.

So how can they work together to strike a financial balance?

Share the load

Women worry about money more than men but they also do less about it, according to a study by insurer Aviva. The research looked at people over 55, and found that more than two thirds of women, compared to just over half of men, are worried about money, but 58% have not budgeted for major expenses, compared to 52% of men.

Within partnerships, it’s likely that one person is a lot more proactive. “It’s me, rather than my wife, Tracey, who knows how much the interest rate is on our mortgage and how much we pay for everything from the utility bills to our daughter’s ballet classes and our son’s football coaching,” says Matthew Brandon, 39, who lives in Cirencester. “Although we consult each other, I keep the closest eye on it.”

Managing the finances is no mean feat and it can be a steep learning curve. In the last five years, Natalie Murray, 26, has gone from being a student to marrying Edmund, 26, a policeman and having their son, Oliver, now four. Natalie is a stay-at-home mum but also runs a local magazine called Around Rugby.

“I’ve had to get clued up about money faster than my friends,” she says. “At the moment, Edmund’s money pays all the major bills, though I tend to buy the groceries. I can feel bad as Edmund puts so much into the joint account but at least I can help us manage our expenses.”

Double up

Monthly outgoings can be reduced with joint financial products. It’s usually cheaper to get annual travel cover jointly rather than single policies, for example. But there are times when two is better than one. Life insurance will only pay out once, so if a couple have a joint policy and they both die in a car crash, there’s one payment.

Original