Balancing your finances

Guidance on keeping your finances in balance from the Consumer Credit Counselling Service. Call HSBC on 03457 404 404 (textphone 18001 03457 125 563)

Interviewer:

'Today we are talking to Jan from the Consumer Credit Counselling Service the UK's leading in debt charity. Jan in our last interview, you gave advice on how people might manage their credit card. What about some guidance on what people should do to keep their finances in balance?'

Jan:

'When you say 'finances in balance' I presume you mean matching spending to income?'

Interviewer:

'Yes that's right'

Jan:

'Well it's so important that people do this. In a perfect world most people would really like to spend less than they earn and effectively they would be savers but in reality there are a lot of people who struggle to match their expenditure to their income. And in the long term this can lead to financial problems. Because quite simply you can't spend more than you earn.'

Interviewer:

'But can't you use overdrafts and credit cards to help you?'

Jan:

'Well overdrafts and credit cards can be useful in trying to smooth out the months where you have maybe unexpected expenditure or a one off payment to make but they shouldn't be regarded as a means of supplementing income on a long term basis. You really need to calculate a budget that allows for the variations between money coming in and going out, and reflects your spending patterns.'

Interviewer:

'How easy is it to plan a budget?'

Jan:

'It's relatively easy to plan, at the end of the day it is just a list of all your expenditure and all your income. The hard part is that it's not always easy to follow. You really need to be disciplined and it will take time but it's one of those things that you can't afford not to do. It will remove worry and aggravation and put you back in control of your money.'

Interviewer:

'I've looked on your website and there is a lot of good advice on budgeting including a budget sheet that allows you to calculate your monthly expenditure. If anyone wants to have a look the website address is www.cccs.co.uk'

'Ok - let's say I've completed a budget and shows I'm spending more than my income on a regular basis, what should I do?'

Jan:

'Well there are really only two things that you can do. Once is to try and increase or maximise your income, the other is to reduce your expenditure. This might sound like I am being quite flippant but the reality for most people is that they can't increase their income very easily and when I say maximise income it means ensuring you're receiving all the benefits you're entitled to and not paying too much tax.'

Interviewer:

'So for most people it really is down to reducing what they spend'

Jan:

'Absolutely - the website goes into more detail but briefly it is a case of looking at every pound you spend and asking yourself 'is it really necessary or is there a better way'? '

Interviewer:

'What do you mean by 'a better way'?'

Jan:

'Well let's look at utility bills for example, some providers offer discounts if you pay your bills by direct debit or monthly in advance. People should really try and use the cheapest supplier for their area and the same applies to other services, such as mobile phones and broadband. It can be difficult to know if you're getting a good deal but there are a number of price comparison websites on the internet and they will really help people make an informed choice.'

Interviewer:

'Is there anything else?'

Jan:

'Where possible try and ensure your payments leave your bank account at the same time as your salary arrives. And then the money that you have left is for you and you to spend as you want. Where you are unable to pay for something on a monthly basis, for example, you need to make sure that you're putting sufficient money away each month that when the annual bill comes in you have the amount saved up and are able to pay in full.'

Interviewer:

'After I do all these things - If I am still faced with spending more than I earn what should I do?'

Jan:

'You need to talk to the people that you owe money to, your creditors. Talk to your bank and other financial organisations. They will be supportive and they will help you look at a way of achieving a better balance. The important thing is, don't ignore it, the problem will only get worse.'

Interviewer:

'Thank you Jan. Before we finish I will just give out the address of your website where people can get advice on budgeting. The address is www.cccs.co.uk'