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Q.How do I budget?
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A.
The most important thing about budgeting is that you use a
system that suits you. Once you've done it a few times, it can
take just a few minutes each week to keep on top of it.
Start by listing all your income such as
wages, benefits, tax credits, maintenance etc. If your pay varies
it could be worth trying to work out an average for the week or
month.
Next, list all your outgoings including bills,
food, loans and those costs that may only crop up occasionally –
such as birthdays, Christmas, holidays, car tax, TV license. Try to
work out an average weekly / monthly amount for these
Try the MoneyBasics
UK: Budget Calculator or download the MoneyBasics
Budget Form to see how you can manage your spending
better.
The results should give you an idea if you are
managing well or struggling and may need further advice. You may
also be surprised as to how much you are spending on certain items
and try to cut back on these expenses.
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Q.What's so good about having a bank account?
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A.
Having an account is safer than carrying large
sums of cash. It can help you to manage your money and may mean you
can pay bills by direct debit. Gas, electric, water and insurance
suppliers often give discounts or cheaper rates for those who pay
by direct debit.
Your benefits can be paid directly into your
account and if you start work you may need an account to have your
wages paid into. You could even earn interest on any savings.
For further information or advice on what
types of accounts are available and how to open a bank account,
take a look at our useful contacts.
Useful links
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Q.I'm having problems with debt
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A.
Most of us owe money to people most of the
time. Bills are a fact of life, but we may find ourselves swamped
by debts and can’t see a way of paying them all.
If you need help overcoming debt, and would like some free
imaprtial advice, take a look at our useful
contacts.
A few golden rules when it comes to dealing
with debt:
Do
- Face up to your situation and resolve to deal
with it.
- Get in touch with everyone you owe money to
and explain your situation.
- Tackle your priority debts first as these
have more serious consequences – rent, mortgage, council tax, gas,
electricity, hire purchase, court fines. Non-priority debts like
credit cards, overdrafts, unsecured loans, catalogues can be sorted
later.
- Remember it is better to offer small regular
amounts that you can keep to rather than large irregular ones you
can’t.
- Do keep copies of all letters you send or
receive.
Don’t
- Ignore the problem. It won’t go away.
- Give up trying to reach an agreement with
your creditors.
- Be threatened or bullied into making promises
you can’t keep to.
- Borrow more to pay off debts – you could get
deeper into debt.
- Be afraid to ask for free specialist
help.
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Q.I need a loan
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A.
You should not borrow money if you cannot
afford to pay it back but we do recognise that sometimes an
emergency or unexpected situation arises meaning that you have to
borrow. You should always think about whether you really need to
borrow the money and if it is for something that is absolutely
necessary.
Having decided that you do need to borrow the
money you need to look around to see what options are available and
most suitable for you. You will need to look not only at the amount
of the regular repayment but also at the length of time over which
you make the repayments. The longer the period over which you make
repayments the more you will pay back!
You will usually have to pay interest on the
amount you borrow – this means you will pay back more than you
actually borrow. As above, don’t borrow money for longer than is
necessary as this will also cost you more to pay back.
Consider whether you can afford to make the
repayments. Some ways of borrowing are cheaper than others and some
lenders are actually illegal and may cost you an arm and a leg! If
you are having difficulties dealing with your money matters or are
in debt you should always seek advice.
Credit Unions
A credit union is a not-for- profit company
made up of members. You can save with a credit union and you can
borrow from a credit union at rates much cheaper than most doorstep
lenders and at some rates which are competitive with the banks.
Find your local credit
union
Useful links:
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Q.Saving for a rainy day
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A.
It is important to set aside money, not only for emergencies,
but also for major expenses like education, homes, cars, and
eventually retirement. Most financial advisors recommend at least
the following:
- Have at least enough in savings to cover
three months of rent and expenses.
- If at all possible, set aside at least
one-fourth of your income each year for emergencies, big purchases
(like homes or cars), and retirement.
Although it is not always possible to meet the saving goals
above, the best way to start is to start saving a little at a time.
Once you create a budget within which you can live comfortably, you
might want to look at ways of cutting back on other expenses or
creating more income.
You may want to talk to a financial advisor about ways you cut
costs and earn more off the savings you have.
If you need any advice or tips on saving, take a look at our
useful contacts.
Find out about a new government supported cash saving scheme
called the
Saving Gateway.