How to Create a Budget

Having a budget that details all your income and expenditures will help you to maintain control of your finances.

It will also help to illustrate the problems you may be having with creditors.

Keep a record of everything you spend money on to complete an accurate picture of your monthly expenditures.

You will also need to work out expenses that do not necessarily occur every month, such as insurance, holidays, car repairs, taxes and the cable television bills. Estimate how much you spend on these each year, and then divide that total by 12 to determine your monthly cost.

Complete a monthly budget to include your basic salary, partner's basic salary, guaranteed overtime, pensions, child benefit, income support, tax credit and other benefits.Then work out your monthly expenditures to include regular commitments, such as mortgage/rent, water and taxes; everyday spending such as food, public transport, childcare and gas; and occasional expenses, such as Christmas gifts, holidays and clothing.

If the difference between your income and expenditure is a positive amount, you have a budget surplus and have money to pay toward your unsecured creditors. If, however, you have more expenditure than income, you have a budget deficit and will need to make changes to your spending habits to pay your unsecured creditors.

If you have maximized your household income, the only alternative solution to increasing you budget surplus is to reduce your spending.

Once you have identified the areas where substantial reductions can be made, you will need to think of ways to actually achieve your goal.

• Housing: Look for DIY opportunities and shop carefully for furniture and appliances. Take advantage of genuine sales wherever possible.
• Transportation: Do what you can to use one car, and perform routine maintenance yourself. If you are going to town, try to use public transportation.
• Utility Bills: Make sure you are with the cheapest supplier for gas and electricity.
• Food: Prepare bagged lunches for work and school. When buying food, prepare a list and stick to it. Try to use coupons from papers and magazines where possible.
• Clothing: Plan your spending in advance and do not over-purchase.
• Insurance: Shop around for the best deal and make sure you only get the cover your family really needs.
• Entertainment/Recreation: Draw up a list of things you and your family can do in the vicinity of your home that are cheap or completely free. Try to stick to a limit on spending money and holidays and book accordingly.
• Savings: Open a separate savings account where you can deposit the required monthly allowance for bills that do not fall due on a regular basis or to deposit amounts to help save for a vacation, etc.