Planning your finances to avoid debt

Planning your finances properly is one of the most important things you can do if you want to stay out of debt. A lot of people who find themselves in trouble are in that situation because they spend their money as they go along, rather than planning in advance.

Here are a few tips for making sure your finances stay in order.

Budgeting

A good budget can save you a lot of worry. By calculating how much you receive and how much all your regular expenses cost you each month, you’ll know exactly how much you need to put aside, and how much you have left to spend on other things.

Without a budget, it’s easy to accidentally overspend – and end up struggling to pay for your essentials – so make sure you’ve planned well if you want to keep your finances safe.

Staying on top of bills

Bills take up a large proportion of most people’s finances, so it’s no wonder that so many people get into arrears every year. Energy bills can be particularly difficult to deal with, especially given the sharp price rises we’ve seen in the last couple of years.

Unless you keep a close eye on stuff like this it can be easy to get into arrears. These arrears will usually have to be paid back as a lump sum (if you can afford it) or over time on top of your regular bills, so it’s important to make sure you’re paying enough as you go along.

The best way to do this is to take regular meter readings – once a month should be fine – and then ask your suppliers to make sure your payments cover your usage. Given that many suppliers only issue statements every six months, failing to do this could allow large arrears to build up without you even realising.

Staying in the black

As simple as it sounds, the best way to avoid debt problems is to avoid debt altogether. It’s a good idea to have some form of credit (e.g. a credit card or overdraft) in case of emergencies, but anyone who’s really serious about staying out of trouble won’t get into debt unless it’s absolutely necessary.

Of course, it’s not always this simple, and unforeseen circumstances often land people in debt. If you do find yourself in debt, the most important thing is that you put together a good repayment plan. And if you think you’re going to struggle, get in touch with a debt adviser.