Being in debt will often mean that people need to make many sacrifices to try to get as much money as possible to pay back their debts. At the CCCS we have been trying to think about ways to live on a tight budget but still have an active social life.

Here are a few of our ideas about ways to have fun but not break the bank:

• Cancel the Pub Trips – Instead of meeting mates down the pub you can save money by asking your pals round to your house for the night. The music will be better, the drinks will be cheaper and you won’t have to scour the streets late at night to find a taxi. You can also ask your mates to return the favour next time you are planning to meet up.

• The great outdoors – Get yourself closer to Mother Nature by enjoying the countryside. Pack up a picnic before you leave and all you will have to pay for is the transport costs. As well as being a thrifty day out, filling you lungs with all that fresh air will help put any money worries to the back of your mind.

• Ditch the gym – Gyms often charge huge amounts and hope that guilt will keep people paying long after they have stopped going to the gym. If you really are keen on getting fit then working out an exercise regime based on jogging outdoors and routines that you can do at home will save hundreds of pounds over a year. This way you can have a health body and healthy finances.

• Brew your own booze – Most of us like a drink from time to time, but the cost of alcohol can make it a guilty pleasure when there are debts to deal with. One way to keep the costs low is to start making your own drinks. Wine or beer making kits can be bought relatively cheaply and offer a great deal of satisfaction when you have perfected your ideal drink. Rhubarb wine anyone?

• Get Cultural – Many museums and art galleries do not charge for admission, and can be a great day out. Dust off your beret and soak up some culture.

• Library – Buying books in shops can soon add up to a lot of money, but borrowing books from your local library will cost you nothing and they usually have a much better selection of books to choose from. More trendy libraries will also have a CD or DVD lending schemes, though they usually charge a small fee for these.

If anyone out there has any ideas on how to have a good time on a budget please add your suggestions to our discussion board.

How to Budget

Budgeting can help you take control of your spending and make sure you always have enough money for the things you need to spend it on. Doing a budget is a really good way of looking at where your money goes.

Take a look at the tips on “Be S.M.A.R.T for 2008” below.

You could run a weekly or monthly budget depending on how frequently your income is paid, or a combination of the two.

Whether you receive a salary or benefits & pensions, you can still run a successful budget.

Some people prefer to pay regular bills by monthly or weekly instalments either by direct debit or payment cards. Others prefer to save a regular amount so that bills can be paid quarterly (gas, electric, water) or yearly – motor & home insurances, TV licence, car tax.

Use the facilities that your bank account may offer to help you budget, such as free internet banking or telephone banking to check your bank account regularly.

You also need to keep track of any cash withdrawals to help you keep to the spending limits you set yourself.

Remember, the small amounts count-

Daily spend on coffee & a muffin - £2.50 = yearly spend of £648!!!!!!!!!! 

Here’s a simple plan to get you started:

Step One: Total Income

Most people find it easier to work on a monthly budget. This means that you calculating a monthly figure for any income that you receive weekly, fortnightly or 4 weekly:

• Weekly figure received: multiple by 52 (weeks per year) and then divide by 12 (months in the year)

• Fortnightly: multiply by 26 (fortnights per year) and divide by 12 (months in the year).

• 4 weekly: multiply by 13 (there are 13 payments of 4 weekly income per year) and divide by 12.

Budgeting on a calendar monthly basis helps as most payments for priorities or creditors are monthly. It also means you are considering every single cost over a full 52 week year.

Step Two: Total Expenses

Some costs will be monthly – mortgage/rent, utilities, etc and some may be quarterly or half yearly costs – TV licence, car tax, insurance on household goods or breakdown cover for boilers/leaks.

Some will be weekly and are more likely to be the items that you buy with cash, or on a debit/switch card or cheque (food, petrol etc.)

You also need to include a monthly figure for clothing and any savings you need for birthdays /Christmas or towards emergencies like car or house repairs. It may be easier to work out what you need to spend over a year, and then divide that figure by 12.

Your budget must be updated if you get a pay rise, or if your costs increase, like mortgage & rent increases, utility bills and insurance.

Hopefully, your income will exceed your expenses and you will have a surplus, meaning you can afford to cover all your costs without using any credit for day to day living costs.

*********** If not, you should take immediate action to ensure that your priorities are covered (housing costs, utilities, TV licence, car tax & insurance) by reducing any unnecessary expenses, such as leisure, sky TV and any high spending on clothes, tobacco etc.

You can also look at reducing your spending on priorities where possible ***********

If you have outstanding credit debts – loans, credit cards, store cards, catalogues, car finance or HP, deduct the total monthly cost of your credit repayments from your surplus.

************* If your expenses already exceed your income before you add up your credit debts , or the credit debt payments take you into a deficit, you should take the steps to try and reduce your costs but also need further advice to help deal with your credit debts *********** contact CCCS immediately.

Step Three: How to use your budget

There may be some items that you pay for during the year but not necessarily every month or every week.

Once you have identified how much you need to budget for these items, you should set aside a monthly figure from your budget.

Two possible methods of doing this are:

Separate & Save

Take the monthly figure you need and transfer it to a savings account.

You could choose a savings account linked to your bank account, so you can transfer amounts back and forth, or an instant access savings account with a cash card/pass book for withdrawals.

 You could use one savings account for all your budget items, or have separate ones for each item (car, clothing, Christmas).

By using the money in the savings account only when one of these items is required means you will always have the money available.

Example:

Jan       - £25 set aside for clothing

 - £20 spent = £5 left in savings account

Feb      - £25 set aside, plus £5 left over from January = £30 available to spend

Building & Balancing

Same theory as Separate & Save, but the monthly budget amount you have calculated stays in your bank account. So over the year you build up a large figure in your bank account BUT with this method you have to remember only to spend the money on what you have budgeted for.

Both of these methods require willpower and require you to take responsibility for your own spending habits.

******** By opening a savings account and bank account with a good interest rate – many accounts start paying interest on balances as low as £1, you could earn some extra interest over the year. ***************

Some people find it useful to keep a record of spending – either on paper or using a spreadsheet or even your mobile phone.

It is also necessary to look at your day to day spending. Try to limit visits to the cash point, or keep a record of your switch/debit card transactions.

If you have a budget of £35 per week for food & housekeeping, £10 for meals at work and £25 per week for travel, try only withdrawing £70 for the week.

You may find that by having contact with actual cash, you are able to spend less than you normally would. So if you have £15 left at the end of the week, you could either have a guilt-free spend, or put it aside for later in the month or into savings.

Visit the Message Boards  to share your budgeting experiences and give us your tips.