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Tackling your debts

Making the most of your budget

Posted 06 January 2012

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Our guide to making the most of your budget looks at four main areas - home, food, utilities and debt - and suggests ways to save money.

Budgeting for your home

The largest portion of your income will probably go on your home, which can include your mortgage / rent / repairs / furnishings and anything else that keeps a roof over your head and gives you somewhere decent to live.

To make the most of your budget, you need to ensure that you keep back enough of your income to live comfortably. This may involve cutting back in other (less important) areas.

Budgeting for food

You can save money on food in lots of ways - don't eat in restaurants, prepare your own sandwiches for work, cook the night before and take leftovers to work, don't buy luxury brands, etc. If there are certain luxuries you feel you can't live without, you could still buy those (we all need some luxuries) if they're affordable. However, for the most part, buying supermarkets' own brands can be a good way to save money.

Budgeting for utilities

Make sure you have the best deal on your tariff - look on comparison sites or contact providers yourself. You don't have to stay with the same provider - or if you like your provider, you don't have to stay on the same tariff. Savings can also be made by paying by Direct Debit.

There are various ways to conserve energy and water around the house, which saves you money and is good for the environment. Don't leave lights switched on in rooms when you're not using them, for instance, or set your central heating to come on only when you are in the house (and awake). Keep warmth in rooms by keeping doors closed.

Living in a properly insulated home should save quite a lot on fuel bills. Double glazing and cavity-wall insulation are two ways to improve the energy efficiency in your home. If you qualify for the Warm Front grant, you could get financial help to make your home more energy efficient.

Budgeting for debt

Millions of people in the UK have some sort of debt. Not all debts are necessarily 'bad' - a mortgage, for example, will allow you to buy a house.

Debts on credit cards, store cards, unsecured loans and interest-charging overdrafts can be OK in the short term, but if you are relying on credit to make ends meet, or if your debt repayments are taking up too much of your monthly budget, then you should get debt advice before things get on top of you.

One of our advisers will be able to explain how you could lower your monthly payments to help you make sure you can meet the cost of your priority bills. Your lenders may also agree to freeze interest and charges.

by Sarah Symons

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To find out more about managing your money and getting free debt advice, visit Money Advice Service, an independent service set up to help people manage their money.