Credit Crunch

Managing your finances

Many people are struggling to manage their finances during the current economic gloom, so here a couple of basic tips on how to cope…

Make a budget

Writing down your income and expenditure is the very first step to organising your finances. Whether this is on the back of an envelope or using spreadsheets on your computer, it’s vitally important to do.

As well as showing you exactly where your money goes each month, it will also highlight areas where you’re overspending. Once you have everything listed - literally everything, down to coffee at work or a cake in the afternoon - look for areas where you can cut back.

Revisit your budget each and every month to see what’s really going on with your money. A good example of careless overspending is on newspapers. Yes, it’s a tiny expenditure but think of it this way; if you spend say, 50p a day on a paper, in one month you’ve spent around £15. You can get news free on the ‘net so you really don’t need to buy a newspaper. And you probably pick something else up when you buy your paper, such as a pack of mints… again, small expense but if you’ve now spent £1 in the newsagent’s, that’s around £30 a month. Many people have a loan that costs that much to repay every month!

Your Bank Account

Do you have the best bank account to suit your needs? Are you getting charged for going into unauthorised overdraft? What interest are you getting on any money in your account?

In  the case of overdraft charges, reputable banks only make one charge per month for going overdrawn but they’ll still charge you if they bounce a cheque or direct debit. The fees for doing so can cost up to £70 because many banks will present the payment twice to see if it’s honoured second time around.

If any of that applies to you, look for a bank account that either offers you a bigger overdraft or one that doesn’t charge as much if you go overdrawn.

Also, be sure that you check your bank statements to see if you’re paying for something you no longer want or use, for example, a book club, gym membership or insurance you’ll never need.

Keeping an eye on what you spend and making sure the keepers of your money - your bank - aren’t overcharging you can save you a lot of money each year so monitor both closely and never buy anything you don’t really need.