Staying in the black, or out of debt, is something that the whole country, and indeed much of the world is trying to achieve in the wake of the global financial disaster of 2008. Just like the banks, many of us got used to living in the red over the last few decades. Just as adverse credit hit the banks, many individuals now live with a chequered credit history, which in turn compounds a lot of financial problems by providing a barrier to accessing many credit and banking facilities. Thankfully, many of the big high street banks like Santander now offer basic bank accounts to customers previously in effect black-listed from mainstream banking, like unemployed people on benefits. However, the basic nature of these accounts, which do not come with an overdraft facility, means that while presenting a step forward, basic bank accounts require us to re-learn the disciplines of proper budgeting.
Having access to basic bank accounts can be vital in securing new employment, providing an account in which to receive wages, or while you are searching for employment, benefits. Online banking and ATM access to cash are big steps forward for those who previously had to physically queue in the Post Office to manage money. Swift access to funds can be helpful, but also a temptation to overspend, and this is where solid budgeting techniques can be really useful. Staying in the black, and avoiding the total waste of money produced by bank penalty charges and other credit default penalties, will help you maximise your spending power and ability to once again take control of your life.
Many people have a vague notion of a budget, but this often simply means knowing the amount of regular payments and when this money will actually arrive. The other, far trickier end to control is expenditure, but this is by no means impossible. The key is to take some time to properly break outgoings down into manageable chunks, the cost of which can then be included in a long term plan.
Weekly, monthly and annual budgets are all required for a proper integrated spending strategy, as these time periods reflect the reality of life’s financial demands. Certain bills, like the television licence, only crop up annually, so cannot be meaningfully included in a monthly or weekly budget plan. However, the overall cash available on a weekly and monthly basis will of course be determined by the amount left after the annual bills are met, which can include car tax and MOT, and of course social occasions like Christmas and Birthdays.
In addition to long term mandatory commitments like bills, you will probably have your own financial goals, such as saving for a holiday, that can be best realised through an integrated budget. This means looking at the budget from the other end, by starting to get an idea of the funds that are essential each week to survive. After totalling these, monthly commitments like rent and council tax can be added to the pot, enabling you to get an idea of how much your basic spend will be. It is then much easier to balance what you will do with the remaining disposable income, as you can often find that a small reduction in spending on leisure each week can provide enough funds to realise a long term goal, like getting a new car, within just a few years.