It's time the penny dropped... How to wise up on cash.
OVERSPENT on Christmas? Is your New Year's resolution to sort your finances once and for all? CAP (Christians Against Poverty) has devised a special CAP Money programme to work with people to help them get out of debt and live within a budget.
But everyone can benefit from the basic principles.
One of the key ideas is to split gazettelive.co.uk/buyaphoto ref: 01323062 your finances into three accounts: a regular payments account, a cash account and a savings account.
The regular payments account is for all your automated payments, such as standing orders and direct debits to go from.
Use your current account for your regular payments account.
Most of your payments will already be set up to come out of this account, so it saves a lot of hassle.
Your income should come into this account.
The savings account is to keep money that you are setting aside for the future, such as Christmas, holidays, contingency fund for emergency repairs and annual expenses such as your car's MOT.
The cash account is where you keep your weekly spending money for items such as food and petrol. Open a new current account to act as your cash account. Once a week withdraw your weekly cash amount that you have budgeted for.
"We advise never to skimp on food," says Anne Young, manager of Middlesbrough CAP.
"Budget PS30 per adult and PS20 per child a week.
"Everybody needs enough money for food. Food is an essential.
"It's so important to eat well and healthily."
The first thing to do to start your new finance-friendly lifestyle is to write down what you need to pay out for.
Start with rent/mortgage, bills, then food, petrol.
"Then think of your yearly expenses - birthdays, Christmas, holidays, car maintenance," adds Anne, a mum-of-seven from Linthorpe.
"Cars are a massive drain on finances.
"Put aside some money in your savings for when your car's MOT is due in case it needs repairs and for insurance.
"Put aside some for savings in case your washer breaks and for yearly expenses.
"Leisure should be the bottom of the pile. Gym memberships, going out, expensive TV packages - when you need to budget, these things have to go."
The CAP Money system advises to put the correct amounts of money in your regular payments account and your cash account, and then simply transfer the rest into your savings account.
Get out of debt...
1 Don't take on any more credit, such as loans, mail order catalogues, hire purchase etc.
2 Stop using your credit cards. 3 Live within your agreed budget. 4 Saving is the only way to avoid getting into debt. If you don't have money saved up, then when you have an unexpected payment to make, you will have no option but to borrow money.
5 There are two approaches to clearing debt: | Clear the smallest first. If you like ticking items off a list, this may be the right one for you. If you have several debts, getting rid of one, even if it is the smallest, can be a real encouragement for many people. | Clear the most expensive first. Look at how much each debt is costing you in terms of interest and charges. Paying more towards the debts that are costing you the most will save you money in the long term.
BUDGET TIPS: Anne Young has some sound advice Picture by KATIE LUNN
Help at hand FOR more help go to: | CAP: Ring 0800 328 0006, free from a landline. | Citizens' Advice: www.citizensadvice.org.uk or ring 08444 111 444. | moneysavingexpert.com