How to take control of your finances

New research has shown that an alarming number of British consumers are taking the 'head in the sand approach' to their personal finances. Failing to keep track of your cash flow can do serious damage to your financial well being. Here is some basic advice on how you can easily manage your money and stay in the black.

Internet and telephone banking services have made it possible to check the balances of your current account, savings account, credit cards and other loans in minutes. However, research has shown that over a half of British consumers check their current account balance once a week, while one in five check it only once a month.

The research, carried out by mobile banking service Monilink, shows that one in three people have accidentally overdrawn because they did not know how much was in their account. A quarter of Brits have had sleepless nights over their finances and two in five long for more control over their money, with a sixth afraid to check their available funds. The upshot is almost one in five of us going overdrawn by over £300 on a regular basis.

Even if you have arranged an overdraft with your bank this can be expensive as interest rates are high. If you have not arranged an overdraft facility you will have to pay steep fines on top of the interest charges every time you overdraw.

This situation can be easily avoided with a little organisation and self-discipline. Internet banking means you can quickly and easily check the balance of your bank account. You can now even check it on your mobile phone or PDA.

There are also a number of free software applications available that allow you to keep track of your finances and help you manage your money. If you want some heavyweight software that also allows you to manage your investments and estimate your tax bill check out Quicken or MS Money. If you are more old school, you can simply keep a note of your spending on paper.

Before you make any significant purchase or cash withdrawal make sure you can afford it. Monilink's research shows that over half of the population is overspending on food and almost a third are overspending on luxury purchases such as cars and widescreen TVs.

While it is tempting to splash out on the latest gadgets and other luxuries, try to exercise some self-discipline. Try not to purchase items on credit or at least look for a no interest hire purchase deal.

And if you really want to get your financial affairs in order, start keeping a close eye on your monthly incomings and outgoings. Add up all your sources of incomes and keep track of where that money is being spent. Do this for a couple of months and you may notice some surprising trends. Again, there are excellent software packages available to help you with this that will automatically generate graphs to help you track your spending.

Many people find that the most trivial things take a significant chunk out of their disposable income. Buying that Starbucks coffee and newspaper in the morning or going out to lunch every day soon adds up. Giving up some of these little expensive habits can free up some cash for other things.

Also be aware of what bills and payments you need to make each month and make sure they are paid on time. Banks make millions each year from missed direct debit and standing order payments. Many utility and service providers offer discounts if you pay by direct debit so it can be a good way to pay. Just make sure you have enough funds in your account to cover these payments.

When it comes down to it good money management is simply a case of knowing how much you have to spend and sticking to that budget. It may take some self-discipline to spend within your limits, but you will be better off in the long run.

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