Tutorial Session - Money Management - Thursday 4th December 2014

Managing Money is a big responsibility and an important life skill to be mastered from an early an age as possible.  I started managing my own money at the age of 16 and learnt the basics from my Mum, who is a "Black Belt" 5th Dan on the subject!  The key points to understand are "Income" and "Outgoings" and that the Income should always exceed the latter, if you are to ever have any "Disposable Income" to provide for lifes' pleasures, hobbies, past times or other habits that may be acquired along the path.  I would also personally recommend that you avoid having  a Joint Bank Account if at all possible.  Life is hard enough accounting for your own spending, let alone someone elses (especially if they are not contributing either)! 

The maintenance of a budgeting tool, such as a Ledger (which can be either manually written, or nowadays via a spreadsheet) is probably the best tool for anyone to have in their box, in order to maintain a close eye on income and expenditure.  I prepare mine for the following month during the last week of the preceding month, in order to calculate ahead and spot any shortfalls (or surpluses) well in advance.  Depending on the employment anyone has, the employer's salary payment schedule will also affect how you should budget and plan ahead.

I spent my entire working life, up until 2005 being paid on a monthly basis, so I always arranged with my bank to ensure that all of my Direct Debits were deducted on the first working day of the following month.  What was left I then divided up into even weekly amounts with which to provide for daily motoring and sustainment costs etc, and what was left after that was down to me to decide how to spend or invest accordingly.  After 2005 I moved to a weekly salary payment schedule which required me to re-arrange my Direct Debits with the Bank in order to spread the costs throughout the month according to the weekly pay day. Council Tax can now be arranged to be collected weekly for instance, which is something else that should be considered when planning a budget.  It is vitally important to keep in touch with your bank and all of your creditors, who are usually more than happy to accommodate for such changes of individual circumstances.

Another useful practice is the maintenance of a folder in which to keep all bills and statements in a logically indexed format.  This will aid in the retrieval of useful information when required to query a bill payment, or perhaps quote a unique account number when required to contact a creditor and confirm individual identity.  The keeping of receipts is also another useful practice, not only in terms of double checking the ledger for expenditure, but also as evidence of purchase in the event of discovering a faulty or defective product.

It is important to also realise that there are numerous organisations available to consult in the event of things going "Pear Shaped" regarding out of control debt.  I recently required the services of one such Debt Management company, after the collapse of my last relationship, which could have cost me my house had I chosen to ignore the warning signs. The most important advice I could give anyone who may encounter such problems in the future is: "Don't Panic but Don't Ignore it".  The sooner you speak to the bank and your creditors, the sooner the situation can be handled and managed accordingly.  In the event of the Creditors or Bank not appearing to be very interested, then you also have the option of speaking to the Citizens Advice Bureau (CAB), who do a fantastic job of finding you the right help - and free of charge.  They were able to refer me to a Licensed Debt Management Company who stepped in and contacted all parties concerned, negotiated realistic and affordable future re-payments, and became a sole point of payment contact regarding the outstanding debts.  Take heart - Not flight!

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http://www.citizensadvice.org.uk/