We could all do with extra money, but if you're currently spending as much as, or more than you earn, it's important to find a way to balance your budget.
Listed below are our top tips for helping to stabilise your domestic budget....
Reduce the cost of domestic bills
The first thing you can look to do is to cut or reduce the cost of your domestic bills. Gas and electric companies don't reward loyal customers with the best rates, so it's good practice to shop around regularly and change your energy supplier for a cheaper deal. Depending on your usage and property size the amount you can save will vary, but for many people the saving can often be several hundreds of pounds a year.
The cutbacks don't just end with utility bills. Maybe your mobile phone contract is up for renewal, and you can consider saving by moving across to a pay-as-you-go tariff, or cheaper provider. Alternatively you can analyse your usage to see if you can move onto a cheaper contract tariff with the same provider. The same applies for car and home insurance – why not shop around for a cheaper provider, or look to cut down the level of coverage you have, keeping it at a bare minimum until your finances recover.
Manage Existing Debts
Debts from credit cards and other high interest forms of lending, are likely to have a massive drain on your monthly finances. The best thing you can do in this situation, is to look to consolidate the debts into one, ideally with a much lower rate of interest. Depending on your credit rating, you may not be able to secure a loan from traditional lenders to consolidate these debts – or at least not at a rate to make it worth your while. Fortunately, there are other options for those with bad credit, such as credit unions, social funding, and guarantor loans. If this is something you're interested in, you'll find more detailed information in our specific guides about these subjects.
Analyse the 'non-essential' spending you do
If after doing the above you're still over budget, it's probably time to start analysing what you're spending your money on. You should consider 'non-essential' spending as anything 'non-bill' related. Factor spending money for groceries into the equation to begin, as we often spend and waste more than we should on food – particularly if we don't plan ahead and visit the shops every couple of days for supplies. Plan out your meals a week in advance and you should be able to calculate with a degree of accuracy how much money is needed for food that week, making it much easier to manage the rest of your 'disposable' income, and remain within budget.
There are many other ways you can save money by not wasting it on non-essential luxuries, but naturally they will depend on the individual. Maybe you don't need that Starbucks coffee every morning, or the half-mile walk to work isn't far enough to warrant a bus journey after all?
Generate Extra Cash
Everyone has skills and talents which can be useful somewhere in the field of employment. Assuming that your work contract allows it, you could look to do some 'freelance' work in your spare time. This could be something as simple and low-key as a small 'lawn mowing' business on your local estate, or cleaning/nannying for your friends neighbours – it doesn't have to be a big exciting venture; the cash will of course come in handy, not to mention having a feeling of satisfaction from being self-employed. Also, depending on what you're doing, with the right focus there's a chance that your little business could grow enough to support you as full time employment. Aside from that you may consider other sources of income, and you might be surprised how many there are once you put your mind to it- do you have a spare room you can let? Perhaps you have old unwanted items which can be sold on ebay or on a car boot? The list is endless really, and only inhibited by one's imagination and motivation to try something new.
When to ask for help
If you've tried all of the above and you still can't get your incomings and outgoings balanced you'll need to seek advice. There are debt advice services who have expertise and experience in this specific area to help you find a plan to deal with the debts. It's important not to shy away from this help with embarrassment – you'll only spiral further into debt; making the situation harder to recover. Besides, you'll be surprised by the amount people in the same predicament; it's a failing of the system really and not necessarily the individuals who get trapped.
Steer clear of commercial companies who can claim to help you with your debt – you can get the same service and expertise from the free services currently around. If you need to turn to help, take a look at the 'National Debtline', 'Stepchange' debt charity, or to the 'Citizens Advice' service for guidance.