Five steps to getting your finances in order

We all know we should put out finances in order - we just need to get around to it. In the first part of our guide to controlling your finances here are five quick points to kickstart the process.

At the start of the year many of us made resolutions to clear our debts, spend less and save more – but how many of us can claim to have followed through with these good intentions? Here are five steps to get you back on track.

First things first you need to know how much you're spending each month – and if you're overspending. List all of your monthly outgoings – from mortgage or rent, household bills, travel costs, food, entertainment costs, plus any money going into savings accounts or towards credit card and loan repayments.

Don't forget to factor in one-off yearly costs like car insurance and MOT and holidays. Divide these by twelve to give you an approximate monthly cost.

Now separate the costs into those that are essential and those that aren't. It's pretty obvious with most costs which category they fall into but if in doubt ask yourself what would happen if you couldn't pay for something. So for example although clearing credit card debt is important missing a payment on your mortgage is far more serious.


You can now draw up a budget, cutting back in certain areas if needs be to tackle any outstanding debt.

If you're falling short get in touch with lenders to see if you can rearrange monthly payments. They'd rather receive something every month than keep chasing you for payments.

Working out a budget should also highlight any costs you can cut out – the gym membership you never use is an obvious one but you may also be shocked by how much you spend on seemingly small things like takeaways and cabs

It's also time to assess your bank and credit card arrangements. Can you extend your overdraft limit with your existing bank or even move to a more competitive bank account? And are you paying more interest on your credit card payments than you need to be?

If you've got a large amount of debt look to switch to a 0% balance transfer card. And if your credit record won't allow that switch to a lower rate card. And once your debt is paid you can start thinking about what to do with your money.