Having a budget that details all your income and expenditure will help you to maintain control of your finances and, if necessary, help to illustrate the problems you may be having to your creditors.

Step 1 - Start with the reality of your current situation

Keep a record of everything you spend money on to complete an accurate picture of your monthly expenditure.

Make a conservative estimate of your annual income and divide it by 12 to get a monthly figure.

You also need to work out expenses that do not necessarily occur every month, such as insurance, holidays, car repairs, vet bills etcetera. Estimate how much you spend on these each year and then divide by 12 to determine your monthly cost.

Step 2 - Complete a monthly budget

The information below will give you a good idea of what needs to be included.

If the difference between your income and expenditure is a positive amount, you have a budget surplus and have money to pay towards your unsecured creditors. If, however, you have more expenditure than income, you have a budget deficit and will need to make changes to your spending habits to find money to pay your unsecured creditors. You should also ensure you are maximising your income. You would benefit from speaking to one of our counsellors who will be able to help you evaluate your spending and make suggestions on how best to manage this situation. Click here to contact us.

Step 3 - Evaluate and reduce your spending

If you have maximised your household income, the only alternative solution to increasing you budget surplus is to reduce your spending.

The first thing to do is look at your expenses (as detailed in the step 2). Ask yourself the following 3 questions for each category:

• Is this category absolutely necessary?
• If not can we do with out it?
• If not can we substantially reduce our spending?

Once you have identified the areas where substantial reductions can be made, you will need to think of ways to actually achieve your goal. Below is a list of ideas to help you get started:

• Housing - look for D.I.Y. opportunities and shop carefully for furniture and appliances. Take advantage of genuine sales wherever possible.
• Transport - do what you can to use one car and perform routine maintenance yourself. If you are going to town try to use public transport.
• Utility Bills - make sure you are with the cheapest supplier for gas and electricity.
• Food - prepare packed lunches for work and school. When purchasing food prepare a list and stick to it. Try to use money off coupons from papers and magazines where possible.
• Clothing - plan your spending in advance and do not over purchase.
• Insurance - shop around for the best deal and make sure you only get the cover your family really needs.
• Entertainment/Recreation - draw up a list of things you and your family can do in the vicinity of your home that are cheap or completely free. Try to stick to a limit on spending money and holidays and book accordingly.
• Savings - open a separate savings account where you can deposit the required monthly allowance for bills that do not fall due on a regular monthly basis or to deposit monthly amounts to help save for a holiday etcetera.