Draw Up a Realistic Budget

In order to work out manage your debt successfully, it is very important to be budget correctly in order to ensure that you have sufficient funds to cover your loan repayments (credit card, credit union loan, mortgage, etc) in addition to covering the expense of day to day living. If you are contemplating taking out a further loan, drawing up a budget will also allow you to work out how much you can afford to repay and whether or not taking a further loan is actually a good idea.

How to Budget

Find the time: Setting aside a few minutes a week is all it takes to review your money situation. Using a budget plan will help you work out your weekly or monthly income and spending. Try to stick to either weekly or monthly, and not a mix of the two.

Your Income: List all your sources of income, for example your pay, benefits, pension income and tax credits. You may have money coming in from other sources, for example from rental income if you have a lodger or rent out a property you own.

Your spending: Don’t worry if you can’t account for every penny coming in – the most important thing is to know roughly where you stand. Be realistic. If you want a better idea of where your money is going, try and keep a spending diary by writing down what you spend each day for a week.

Don’t forget occasional items (such as birthdays) and things that you pay for once a year (such as car tax and insurance).

For more information on budgeting visit our budgeting section.