Avoiding debt can be easier said than done, as can repaying any debt you’re already carrying – but there are several things you could do to help strengthen your finances, and we’re going to take a look at one of these now…

Budgeting

Budgeting is a great way of organising your finances; it allows you to see where all your money is coming from and where all of it is going to.

To create your own budget, you should begin by writing down everything you earn in a month – including any money you receive in benefits and grants, for example.

Once you’ve got this written down, you should write down everything you spend in a month on your essential costs (your mortgage payments, for example, and your utility bills). You could go through your receipts/statements to find out exactly where your money is going to – this will be a lot more accurate than just estimating and going from memory.

Note: you shouldn’t write down the money you spend on unsecured debts (if you’ve got any) and non-essential purchases at this stage – you’ll be covering these next.

So, at this stage, you should have income and your essential expenditure written down.

Next, you need to subtract your expenditure from your income, which will leave you with your disposable income. This is the money you’ve got each month to spend on any unsecured debts you may have. If you’ve got any money left over after doing this, you could spend it on non-essential purchases and/or savings.

If you’re already carrying debt

If you are carrying unsecured debts, you’ll need to figure out if your disposable income is going to be enough to cover your repayments. If it is, and you’re left with some spare money, why not overpay your debts each month so you’re debt free sooner?

If you’re not left with enough, you’ll need to address this straight away – otherwise, your debts might just get worse and you could still be repaying them after you’ve retired.

If you’re not carrying debt

If you’re not carrying unsecured debt now, it doesn’t mean your finances aren’t at risk.

Budgeting can allow you to ‘foresee’ problems with your finances (potential shortcomings, for example) – which can be addressed early on to help you avoid falling into debt at all.

Carrying debts into retirement can make it much harder to enjoy your ‘golden years’ – which is one reason why it’s so important to repay any debts you’re carrying now and do all you can to protect yourself against future debt.

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