For the thousands of Scots who struggle to get to the end of the month without relying on some form of credit, an effective budget could be a massive help. A comprehensive and truthful budget will allow you to see exactly where your money is going and will highlight any problem areas, allowing you to start taking steps to remedy the situation before your debt problems get out of hand.
However, drawing up an effective budget can be harder than you think. A budget that really works involves much more than just writing down what you spent last month, deciding to spend less on going out and takeaways, and then magically finding yourself financially stable.
So how do you draw up an effective budget?
The first thing to do is to set aside at least a couple of hours which you can dedicate to drawing up your budget. Ensure that you’ll be able to properly concentrate and then gather all of your receipts, payslips, bank statements and any other relevant paperwork. In order for a budget to be accurate you should aim to look at your incomings and outgoings for at least the last three months.
You can create your own budget on a spreadsheet (or even on paper), but we often find that using a template budget will help to ensure that you haven't missed anything. The free budget planner tool available on www.scotlanddebt.co.uk is a great place to start. As well as your obvious bills such as rent/mortgage, council tax, and gas and electricity, don’t forget to include smaller items such as the coffee you buy on your way into work, or your daily lunchtime meal deal. It all adds up!
Now you have to go through and populate your budget. Make sure that you are brutally honest with yourself here; otherwise you will just be wasting your time. Break your spending down into categories, such as running your home, motoring, food etc. and then highlight all of the figures that constitute essential spending.
Another good idea is to add additional columns to your budget for previous months, or even create an annual figure for each category. This will help you to see if the amount you spend on certain items is relatively stable or if it tends to fluctuate. If your spend on a certain category changes throughout the year, then you may be better to put an average amount into your budget. It is also important to include projections for the costs of one-off or annual events such as Christmas, birthdays, and a summer holiday.
Now comes the important bit - does your budget balance? In other words, does the amount you spend in a month total more or less than the amount you earn during this same period?
If you spend less than you earn that’s great; why not think about building up your savings, paying more off your mortgage, or increasing your contributions to your pension scheme? However, if you are spending more than you earn this is a sign that you need to make some changes now, before your debt problems get worse.
Even if your budget is looking healthy it's always a good idea to try and make savings where you can, and if your budget is highlighting some problems this step is absolutely essential. First of all try and save on your essential spending:
Next it is time to tackle your non-essential spending, as it is here that you can easily make some big savings by making small changes. Why not consider:
If after cutting down your spending, your budget is still in the red, it’s time to contact the professionals. Scotland Debt Solutions have been helping Scots take control of their finances and find their way out of debt for over 30 years. Contact our friendly and knowledgeable advisers on 0800 063 9250 today for expert help and guidance. We will take the time to understand you and your situation before explaining your options and recommending the best course of action.
Whether this is an informal debt solution, or an insolvency procedure such as a Debt Arrangement Scheme, Trust Deed or Sequestration, here at Scotland Debt Solutions we will be with you every step of the way.
The Register of Insolvencies is a public register that documents Trust Deeds until five years after the discharge date and includes personal details.
Joint Trust Deeds don’t exist, however, if you want to run a Trust Deed that encompasses debts as a couple, this will be two individual Trust Deeds.
Our Scottish based team can help advise you on your debt problems.