As the credit crunch continues to bite and the amount of personal debt multiples each month, an increasing amount of people are finding themselves in a situation where they can no longer cope with their finances, need debt advice and a simple money management plan.
In the past, you may have been depending on your credit cards, store cards and personal loans, but now these are maxed out and your bank will not extend your credit limit.
Living within your means can be a struggle, especially if you aided your additional spending with credit cards and loans. It can be very difficult to decrease the amount that you spend, but if you need help to manage debt, a simple money management budget plan is what you need to prevent yourself spirally further into debt.
Below gives you an idea of how to create a Simple Money Management plan. If you are cannot afford to repay your debt, it is essential that you create a much stricter budget so that you are not spending more than you can afford to.
1: Calculate your Expenses
The first step to creating your Simple Money Management Plan is to work out how much you spend on necessities and additional items each month.
At the beginning of your budget, it would be ideal if you kept every one of your receipts so that you can track exactly where you are spending your money. This will provide you with a complete picture of your expenses.
You may find that keeping hold of your receipts shows you exactly how much money you are wasting on non-essential items. Your first priority should be to cut back this spending to practically £0, as it is likely to be one of the causes of your debt problems.
2: Create your Simple Money Management Plan
Now that you have calculated your monthly expenses, it is time to set yourself a strict but realistic monthly budget. You don’t want your budget to be too harsh so that it is impossible to stick to, but you also need to cut back enough so that you have spare cash to pay off your debts.
The idea is to have a big as gap possible between your income and what you spend. You might find that the gap is only small or even a negative number. At this point you might begin thinking about how to make additional income, perhaps by taking on a second job.
By detailing the cost of essential monthly expenditures, such as mortgage payments, you will be able to create a complete simple money management plan which includes all of your monthly spending, which should hopefully give you better debt management skills.