26th January 2015
More than 21 million adults in Britain do not have a household budget, and a further six million have a budget that they don’t stick to1, according to new findings released today (January 26) by StepChange Debt Charity to mark the start of Debt Awareness Week.
The charity is urging people, especially those who are struggling financially, to set a detailed household budget to get a clear picture of their finances.
A comprehensive budget is one of the key steps contained within the charity’s Debt Awareness Week - 7 Days, 7 Ways campaign, which is aimed at helping people to get control of their finances and start tackling their debt problems.
7 Days, 7 Ways
Grab the Bill by the Horns – As a first step, the charity is urging people to open all their bills and statements as soon as they land. A survey commissioned by the charity, found that 13% of people don’t open their bills immediately. Those not opening their bills immediately cited fear of collections or enforcement action (17%), being afraid to know the full extent of their financial position (14%) and embarrassment about their financial position (12%) as reasons for this.
This has a further negative impact leaving those who don’t open bills immediately feeling worried (26%), helpless (17%) or frustrated (11%).
Don’t pay those who shout loudest - Even when you know how much you owe, it can be difficult to know who to pay first. The creditors who make the most demands are not necessarily the ones that should be prioritised – payments like mortgages, rent, council tax and energy bills should come top of the list.
Know your outgoings - A thorough budget is vital in being able to manage money effectively, especially for those who are struggling to meet their living costs. With 56% of people surveyed saying they don’t have a household budget or have one but don’t stick to it, the charity is highlighting this step as one of the most important.
See the wood from the money trees - Cutting back on expenditure and considering ways to maximise income can be effective in helping to regain control of finances. The charity’s MoneyAware website has many useful hints and tips to get people started.
Change the story’s ending - Previous research found that half of StepChange Debt Charity clients waited over a year between starting to worry that their debt was a problem and seeking help3. The charity is encouraging people to get advice as soon as they feel their finances may be getting out of control.
The good – not the bad and the ugly - Taking on extra credit to try and meet existing credit commitments often makes the situation worse, particularly loans taken from high-cost short-term lenders like payday loan companies. StepChange Debt Charity would like to see government, creditors and the debt advice sector working together to provide affordable alternatives for people who feel they have no other options.
Don’t give up - Even when a debt solution has been agreed, circumstances can be difficult and sticking to a tight budget can feel tough. But sticking to an agreed plan means there will be light at the end of the tunnel.
Mike O’Connor, Chief Executive of StepChange Debt Charity, said:
“Many people are living on the edge of their financial means and even a small reduction in income or increase in living costs can tip them into problem debt. It is crucial that people do not feel scared or embarrassed by having a money problem, but instead take positive steps to bring their finances under control. Problem debt can hit any of us and seeking free confidential advice as soon as possible is the start of getting back on your feet.”